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Kinder Morgan Inc. (KMI - Analyst Report) reported second quarter 2013 earnings of 27 cents a share from continuing operations, failing to meet the Zacks Consensus Estimate of 31 cents. Also, the quarterly earnings decreased from the year-earlier profit level of 36 cents.
Total revenue for the quarter increased 55.8% year over year to $3.38 billion. The reported figure also surpassed our expectation of $3.17 billion.


Kinder Morgan boosted its quarterly dividend by 14% to 40 cents a share ($1.60 per share annualized) from 35 cents ($1.40 per share annualized) paid in the second quarter of 2012.

For 2013, management expects a hike of 18% in declared cash distributions per unit from 2012.

The company’s growth curve will be driven by its ownership of the general partners of Kinder Morgan Energy Partners, L.P. (KMP - Analyst Report) and El Paso Pipeline Partners, L.P. (EPB - Snapshot Report). The natural gas assets acquired by Kinder Morgan through the El Paso Corporation will further augment dividend payments.

Operational Highlights

Total expenses in the quarter were $2.61 billion, representing a 36.7% increase from $1.91 billion spent in the second quarter of 2012.

Operating income came in at $775.0 million versus $260.0 million in the year-ago quarter. Operating margin was 22.9% compared with approximately 12.0% in the year-ago quarter.


Cash available for dividend payments was $294.0 million in the second quarter of 2013, an decrease of 4.2% from $307.0 million in the comparable quarter last year. As of Jun 30, 2013 Kinder Morgan reported $141.0 million of cash and cash equivalents, while long-term debt was $7.73 billion.


Kinder Morgan holds a Zacks Rank #3 (Hold). There are other stocks in the oil and gas industry, like Zacks Rank #1 (Strong Buy) Cheniere Energy Partners LP. (CQP), which appear more promising.


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