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Kinder Morgan (KMI) Q3 Earnings Beat & Revenues Lag Estimates
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Energy infrastructure provider Kinder Morgan Inc (KMI - Free Report) reported third-quarter 2018 earnings of 21 cents per share from continuing operations, beating the Zacks Consensus Estimate of 20 cents and surging 40% from 15 cents in the year-ago quarter.
Total revenues increased 7.2% year over year to $3,517 million. However, the top line lagged the Zacks Consensus Estimate of $3,533 million.
Kinder Morgan, Inc. Price, Consensus and EPS Surprise
Higher contribution from almost all large transmission intrastate and interstate systems along with the midstream gathering and processing assets drove third-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 annualized). The dividend is payable on Nov 15, 2018, to shareholders on record as of Oct 31, 2018.
Segment Analysis
Natural Gas Pipelines: Operating income in the segment was $1,009 million, up8.7% from $928 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: The segment reported earnings of $233 million, which increased 7.4% from $217 million in third-quarter 2017. Higher volumes mainly from SACROC and Tall Cotton assets supported the upside. Moreover, higher volumes as well as NGL and CO2 prices contributed to growth.
Terminals: This business unit delivered profit of $299 million, which improved 1% from $296 million in the July-September quarter of 2017, mainly due to growth in liquids operations.
Products Pipelines: This segment recorded earnings of $309 million, up 2.3% year over year. Higher throughput on Cochin and Double H Pipelines were responsible for the improvement.
Kinder Morgan Canada: The segment reported earnings of $32 million, which declined 36% from $50 million in third-quarter 2017. Lower income was caused by the sale of Trans Mountain on Aug 31, 2018.
Operational Highlights
Operating expenses in the quarter were $2,002 million, down 18.5% from $2,455 million in the third quarter of 2017.
Operating income amounted $1,515 million, up 83.4% from the year-ago quarter’s figure. Operating margin was approximately 43.1% compared with 25.2% in the year-ago quarter.
Financials
The company reported third-quarter distributable cash flow of $1,093 million compared with $1,055 million in the prior-year quarter. The company had a project backlog of $6.5 billion at the end of the quarter.
As of Sep 30, 2018, Kinder Morgan reported $3,459 million in cash and cash equivalents. The company’s long-term debt amounted to $34,625 million at the quarter end. Total debt-to-capitalization ratio at the end of the third quarter was 49.5%.
Q3 Price Performance
During the quarter under review, Kinder Morgan’s shares inched up 0.4% compared with the industry’s 3.8% decline.
Outlook
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 increased capital expenditure projection to $2.5 billion, up $300 millionfor growth projects. The company plans to finance the investment through internally generated cash flow.
Zacks Rank & Stocks to Consider
Kinder Morgan currently carries a Zacks Rank #3 (Hold).
Denbury is a exploration and production (E&P) company engaged in the acquisition, development, operation, and exploration of oil and natural gas properties. It pulled off an average positive earnings surprise of 162.9% in the last four quarters.
Shell Midstream Partners is involved in owning, operating, developing and acquiring pipelines and other midstream assets. The partnership delivered an average positive earnings surprise of 7.9% in the trailing four quarters.
Based in Rome, Italy, Eni is among the leading integrated energy players in the world. The partnership delivered a negative earnings surprise of 0.3% in the last four quarters.
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Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Kinder Morgan (KMI) Q3 Earnings Beat & Revenues Lag Estimates
Energy infrastructure provider Kinder Morgan Inc (KMI - Free Report) reported third-quarter 2018 earnings of 21 cents per share from continuing operations, beating the Zacks Consensus Estimate of 20 cents and surging 40% from 15 cents in the year-ago quarter.
Total revenues increased 7.2% year over year to $3,517 million. However, the top line lagged the Zacks Consensus Estimate of $3,533 million.
Kinder Morgan, Inc. Price, Consensus and EPS Surprise
Kinder Morgan, Inc. Price, Consensus and EPS Surprise | Kinder Morgan, Inc. Quote
Higher contribution from almost all large transmission intrastate and interstate systems along with the midstream gathering and processing assets drove third-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 annualized). The dividend is payable on Nov 15, 2018, to shareholders on record as of Oct 31, 2018.
Segment Analysis
Natural Gas Pipelines: Operating income in the segment was $1,009 million, up8.7% from $928 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: The segment reported earnings of $233 million, which increased 7.4% from $217 million in third-quarter 2017. Higher volumes mainly from SACROC and Tall Cotton assets supported the upside. Moreover, higher volumes as well as NGL and CO2 prices contributed to growth.
Terminals: This business unit delivered profit of $299 million, which improved 1% from $296 million in the July-September quarter of 2017, mainly due to growth in liquids operations.
Products Pipelines: This segment recorded earnings of $309 million, up 2.3% year over year. Higher throughput on Cochin and Double H Pipelines were responsible for the improvement.
Kinder Morgan Canada: The segment reported earnings of $32 million, which declined 36% from $50 million in third-quarter 2017. Lower income was caused by the sale of Trans Mountain on Aug 31, 2018.
Operational Highlights
Operating expenses in the quarter were $2,002 million, down 18.5% from $2,455 million in the third quarter of 2017.
Operating income amounted $1,515 million, up 83.4% from the year-ago quarter’s figure. Operating margin was approximately 43.1% compared with 25.2% in the year-ago quarter.
Financials
The company reported third-quarter distributable cash flow of $1,093 million compared with $1,055 million in the prior-year quarter. The company had a project backlog of $6.5 billion at the end of the quarter.
As of Sep 30, 2018, Kinder Morgan reported $3,459 million in cash and cash equivalents. The company’s long-term debt amounted to $34,625 million at the quarter end. Total debt-to-capitalization ratio at the end of the third quarter was 49.5%.
Q3 Price Performance
During the quarter under review, Kinder Morgan’s shares inched up 0.4% compared with the industry’s 3.8% decline.
Outlook
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 increased capital expenditure projection to $2.5 billion, up $300 millionfor growth projects. The company plans to finance the investment through internally generated cash flow.
Zacks Rank & Stocks to Consider
Kinder Morgan currently carries a Zacks Rank #3 (Hold).
A few better-ranked players in the same sector are Denbury Resources Inc , Shell Midstream Partners, L.P and Eni SpA (E - Free Report) . All these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Denbury is a exploration and production (E&P) company engaged in the acquisition, development, operation, and exploration of oil and natural gas properties. It pulled off an average positive earnings surprise of 162.9% in the last four quarters.
Shell Midstream Partners is involved in owning, operating, developing and acquiring pipelines and other midstream assets. The partnership delivered an average positive earnings surprise of 7.9% in the trailing four quarters.
Based in Rome, Italy, Eni is among the leading integrated energy players in the world. The partnership delivered a negative earnings surprise of 0.3% in the last four quarters.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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