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Kinder Morgan (KMI) Q1 Earnings Beat Estimates, Revenues Lag (Revised)

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Kinder Morgan Inc. (KMI - Free Report) reported first-quarter 2018 earnings of 22 cents per share from continuing operations. The bottom line beat the Zacks Consensus Estimate of 21 cents and increased more than 29% from 17 cents in the year-ago quarter.

Increased contribution from the liquid terminals and the Texas Interstate System contributed to the improvement.

Kinder Morgan, Inc. Price, Consensus and EPS Surprise


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

Total revenues dropped by 0.2% year over year to $3,418 million. Moreover, the top line missed the Zacks Consensus Estimate of $3,482 million. The downside can be attributed to higher expenses and lower contributions from the CO2, Terminals and Products Pipelines segment.


Kinder Morgan raised quarterly dividend to 20 cents per share (80 cents per share annualized) from 12.5 cents in the preceding quarter. This represents an increase of 60% and is in line with the company’s plans announced in 2017. The dividend is payable on May 15, to shareholders on record as of Apr 30.

Segment Analysis

Natural Gas Pipelines: Operating income from this segment was $1,082 million, up 6% from $1,019 million in the year-ago quarter. Higher contribution from the Texas Interstate System and favorable outcome from El Paso Natural Gas (EPNG) as well as Florida Gas Transmission Pipeline led to the improvement. The growth came from various midstream gathering and processing assets, including Hiland, due to higher drilling activity.

CO2: The segment reported earnings of $237 million, which jumped 7% from $222 million in first-quarter 2017. Higher commodity prices were responsible for the upside.

Terminals: This business unit reported profit of $296 million, which declined 2% from $302 million in the January-March quarter of 2017, mainly due to divestitures and lower contributions from existing Jones Act tankers due to lowered charter rates.

Products Pipelines: This segment recorded earnings of $290 million, up 1% year over year.

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

Operational Highlights

Total expenses in the quarter were $2,469 million, up 1% from $2,447 million spent in the first quarter of 2017.

Operating income was $949 million, down from an operating profit of $977 million in the year-ago quarter.

First-quarter net income of $542 million increased from $445 million in the comparable quarter in 2017.


The company reported first-quarter distributable cash flow of $1,247 million compared with $1,215 million in the year-earlier quarter.

As of Mar 31, 2018, Kinder Morgan had cash and cash equivalents of $294 million. The company’s long-term debt amounted to $34,723 million at the end of the quarter. Total debt-to-capitalization ratio at the end of first-quarter 2018 was 49.7%.

Q1 Price Performance

During the January-March quarter of 2018, Kinder Morgan’s shares lost 16.6% compared with industry’s decline of 14.9%.


Kinder Morgan increased its dividend by 60% to 80 cents for 2018 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 raised capital expenditure projection by $100 million from initial estimates to $2.3 billion for growth projects.

Zacks Rank and Stocks to Consider

Kinder Morgan carries a Zacks Rank #3 (Hold).

A few better-ranked players in the same sector are Nine Energy Service, Inc (NINE - Free Report) , BaytexEnergy Corp (BTE - Free Report) and SunCoke Energy Inc (SXC - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nine Energy Service, based in Houston, TX, is engaged in delivering onshore completion and production services to unconventional oil and gas resource development. The company posted an average positive earnings surprise of 6.25% in the preceding quarter.

Baytex Energy is a conventional oil and gas income trust focused on maintaining its production and asset base through internal property development and delivering consistent returns to its unitholders. It pulled off an average positive earnings surprise of 77.3% over the last three quarters.

SunCoke Energy produces metallurgical coke in the United States. The company delivered an average positive earnings surprise of 130.6% in the last four quarters.

(We are reissuing this article to correct a mistake. The original article, issued on Apr 19, 2018, should no longer be relied upon.)

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