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Kinder Morgan (KMI) Beats Q2 Earnings and Revenue Estimates

Energy infrastructure provider Kinder Morgan Inc.KMI reported second-quarter 2018 earnings of 21 cents per share from continuing operations, which beat the Zacks Consensus Estimate of 19 cents and improved 50% from 14 cents in the year-ago quarter.

Kinder Morgan, Inc. Price, Consensus and EPS Surprise

Kinder Morgan, Inc. Price, Consensus and EPS Surprise | Kinder Morgan, Inc. Quote

Total revenues during the quarter inched up 1.8% year over year to $3,428 million from $3,368 million. Moreover, the top line surpassed the Zacks Consensus Estimate of $3,422 million.

Higher contribution from almost all of the company's large transmission intrastate and interstate systems along with the midstream gathering and processing assets supported second-quarter results. Higher contribution from the liquid terminals along with higher commodity prices propelled growth.

Dividend

Kinder Morgan raised quarterly dividend to 20 cents per share (80 cents per share annualized). The dividend is payable on Aug 15 to shareholders on record as of Jul 31.

Segment Analysis

Natural Gas Pipelines : Operating income from this segment was $1,001 million, up11% from $905 million in the year-ago quarter. Higher contribution from the Texas Interstate System and favorable outcome from El Paso Natural Gas (EPNG), Tennessee Gas Pipeline (TGP), Natural Gas Pipeline Company of America (NGPL) and Colorado Interstate Gas (CIG) drove figures. The growth came from various midstream gathering and processing assets, including Hiland and KinderHawk, due to higher drilling activity and production.

CO2 : Earnings in this segment came in at $221 million, marginally up from from $220 million in second-quarter 2017. Higher volumes mainly at SACROC and Tall Cotton assets supported the upside. Moreover,higher commodity prices also contributed to growth.

Terminals : This business unit posted profits of $308 million, up 3%from $299 million in the April-June quarter of 2017. The upside can be mainly attributed to significant contributions from the liquid terminals.

Products Pipelines : This segment recorded earnings of $318 million, up 10% year over year. Higher refined products volumes were responsible for the improvement and were partially offset by increased expenses.

Kinder Morgan Canada : The segment posted earnings of $46 million, which increased 7% from $43 million in second-quarter 2017. Higher capitalized equity financing costs related to the Trans Mountain Expansion Project boosted growth.

Operational Highlights

Total expenses in the quarter were $3,156 million, up nearly 29% from $2,450 million spent in the second quarter of 2017.

Operating income of $272 million declined 70.4% from $918 million in the year-ago quarter.

The company reported a net loss of $180 million during the second quarter against net income of $337 million in the prior-year quarter.

Financials

The company reported second-quarter distributable cash flow of $1,117 million compared with $1,022 million in the prior-year quarter.

As of Jun 30, Kinder Morgan had cash and cash equivalents of $271 million. The company's long-term debt amounted to $34,640 million at the end of the quarter. Total debt-to-capitalization ratio at the end of second-quarter 2018 was 50.1%.

Q2 Price Performance

During the quarter, Kinder Morgan has outperformed the industry . In the aforesaid period, the stock has gained 17.3% compared with the industry's rise of 8%.

Guidance

Kinder Morgan raised 2018 dividend by 60% to 80 cents from 50 cents in 2017. It expects EBITDA and distributable cash flow of about $7.5 billion and $4.57 billion, respectively.

For 2018, Kinder Morgan reiterated capital expenditure projection of $2.4 billion for growth projects.

Zacks Rank and Stocks to Consider

Kinder Morgan currently has a Zacks Rank #3 (Hold).

A few better-ranked players in the same sector are Occidental Petroleum Corporation OXY and China Petroleum and Chemical Corporation SNP , also known as Sinopec, and CVR Refining, LP CVRR . All these stocks flaunt a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Occidental Petroleum is an international oil and gas exploration and production company. It pulled off an average positive earnings surprise of 30.2% in the last four quarters.

Sinopec is one of the largest petroleum and petrochemical companies in Asia. The company delivered an average positive earnings surprise of 492.8% in the trailing four quarters.

Sugar Land, TX-based CVR Refining is an independent downstream energy partnership with refining and associated logistics properties in the Midcontinent United States. The company delivered an average positive earnings surprise of 7.05% in the last four quarters.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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