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Kinder Morgan (KMI) Beats Q1 Earnings Estimates, Ups Dividend

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Kinder Morgan Inc. KMI reported first-quarter 2022 adjusted earnings per share of 32 cents, beating the Zacks Consensus Estimate of 27 cents per share. However, the bottom line declined from the year-ago quarter’s 60 cents per share.

Total quarterly revenues of $4,293 million beat the Zacks Consensus Estimate of $3,879 million. The top line declined from $5,211 million in the prior-year quarter.

The better-than-expected results can be attributed to higher refinery utilization rates and a rebound in fuel demand. The positives were partially offset by lower contributions from the Natural Gas Pipelines segment and a decline in crude volumes.

Kinder Morgan, Inc. Price, Consensus and EPS Surprise

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

Kinder Morgan, Inc. price-consensus-eps-surprise-chart | Kinder Morgan, Inc. Quote

Dividend Hike

The company’s board of directors approved a cash dividend of 27.75 cents per share for the first quarter of 2022. This suggests a 2.8% increase from the prior dividend of 27 cents per share. The amount is payable on May 16, 2022, to stockholders of record as of the close of business on May 2, 2022.

Segmental Analysis

Natural Gas Pipelines: For the March-end quarter of 2022, adjusted earnings before depreciation, depletion and amortization expenses, including the amortization of the excess cost of equity investments (EBDA), declined to $1,297 million from $2,094 million a year ago. Lower contributions from the El Paso Natural Gas and Colorado Interstate Pipeline hurt the segment.

Products Pipelines: The segment’s EBDA for the first quarter was $299 million, reflecting a jump from $263 million a year ago. The continued recovery in demand for refined products aided the business unit.

Gasoline transported volumes increased 5% year over year in the March-end quarter, while jet fuel volumes skyrocketed almost 38%.

Terminals: Through the segment, Kinder Morgan generated quarterly EBDA of $238 million, up from the year-ago period’s $227 million. Higher refinery utilization rates and continued demand recovery primarily aided the segment.

CO2: The segment’s EBDA was recorded at $208 million, down from the year-ago quarter’s figure of $291 million. The underperformance was caused by a decline in crude volumes due to Winter Storm Uri.

Operational Highlights

Expenses related to operations and maintenance totaled $585 million, up from $514 million a year ago. However, total operating costs declined to $3,269 million in the first quarter from $3,325 million in the corresponding period of 2021.

Distributable Cash Flow

Kinder Morgan’s first-quarter distributable cash flow (DCF) was $1,455 million compared with $2,329 million a year ago.

Balance Sheet

As of Mar 31, 2022, Kinder Morgan reported $84 million in cash and cash equivalents. The company’s long-term debt amounted to $28,175 million at the quarter-end, resulting in a debt to capitalization of 49.8%.

Guidance

For 2022, Kinder Morgan expects to generate a net income of $2.5 billion. The company anticipates DCF and adjusted EBITDA of $4.7 billion and $7.2 billion, respectively.

Zacks Rank & Other Stocks to Consider

Kinder Morgan currently has a Zack Rank #2 (Buy).

Investors interested in the energy sector might also look at the following companies that presently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Imperial Oil Limited IMO is one of the largest integrated oil companies in Canada, mainly engaged in oil and gas production, petroleum product refining and marketing, and the chemical business. Apart from low leverage for its industry, Imperial Oil has ample liquidity, with cash and cash equivalents of C$1.5 billion.

Imperial Oil’s earnings for 2022 are expected to increase 113% year over year. IMO remains strongly committed to returning money to investors via dividends. The company's board of directors recently approved a hike in quarterly dividend payment. The new payout of 34 Canadian cents is 26% above the prior dividend.

Continental Resources Inc. CLR is an explorer and producer of oil and natural gas. It has a premier position in the Bakken area. Investors should know that as of Dec 31, 2021, CLR’s estimated proved reserves were 1,645.3 MMBoe.

CLR’s earnings for 2022 are expected to surge 112.2% year over year. Continental Resources’ board of directors announced a quarterly dividend payment of 23 cents per share, a 15% increase from 20 cents paid out in the previous quarter. The amount will be paid out on Mar 4, 2022, to stockholders of record as of Feb 22, 2022.

Cactus Inc. WHD is involved in manufacturing, designing and selling wellhead and pressure-control equipment. At the fourth-quarter end, Cactus had cash and cash equivalents of $301.7 million, which can provide it with immense financial flexibility. It had no bank debt outstanding as of Dec 31, 2021.

Cactus’ earnings for 2022 are expected to increase 115.3% year over year. WHD’s board declared a quarterly cash dividend of 11 cents per share. This reflects an increment of 10% from the prior dividend payout.


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