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Kinder Morgan (KMI) Q3 Earnings Meet, Revenues Lag Estimates

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Kinder Morgan, Inc. KMI posted third-quarter 2019 adjusted earnings per share of 22 cents, in line with the Zacks Consensus Estimate. The bottom line also improved from the year-ago quarter’s 21 cents.

Total revenues declined year over year to $3,214 million from $3,517 million and missed the Zacks Consensus Estimate of $3,554 million.

The strong quarterly earnings were backed by increased transported volumes of natural gas, diesel and jet fuels. This was partially negated by higher lease expenses at Kinder Morgan’s Edmonton South Terminal.

Segment Analysis

Natural Gas Pipelines: Adjusted earnings before depreciation, depletion and amortization expenses, including amortization of excess cost of equity investments (EBDA), in the segment for the September quarter of 2019 were up 8.5% year over year from $1,005 million to $1,090 million. Higher transported natural gas volumes, primarily through the El Paso Natural Gas pipeline system, attributed to the outperformance.

Products Pipelines: The segment’s adjusted EBDA for the third quarter was reported at $336 million, showing an improvement of 7.3% from $313 million a year ago. Higher transported volumes of diesel and jet fuels aided the segment.

Terminals: Through this segment, Kinder Morgan generated quarterly adjusted EBDA of $295 million, down 1.3% from the year-ago period due to a surge in lease expenses at the company’s Edmonton South Terminal.

CO2: The segment’s EBDA declined 36% to $149 million from $233 million a year ago, hurt by decline in commodity prices.

Operational Highlights

Expenses related to operations and maintenance totaled $668 million, up 3.4% from $646 million a year ago.

Operating income amounted to $951 million, down 37.2% from the year-ago quarter’s figure.


The company’s third-quarter distributable cash flow increased to $1,140 million from $1,093 million a year ago. The company recorded project backlog at $4.1 billion at third quarter’s end.

As of Sep 30, 2019, Kinder Morgan reported $241 million in cash and cash equivalents. The company’s long-term debt amounted to $30,849 million at quarter-end. Total debt-to-capitalization ratio at the end of the third quarter was 50.6%.


Kinder Morgan reaffirms 2019 dividend at $1.00 per common share. Moreover, the company maintains adjusted EBITDA and DCF for 2019 at $7.8 billion and $5 billion, respectively.

However, Kinder Morgan added that its adjusted EBITDA for 2019 could be 3% below budget. This was owing to delays witnessed in placing liquefied natural gas export facility at Elba Island into service.

For 2019, the company has maintained its expectation to spend $3.1 billion on growth developments and joint ventures.

Zacks Rank & Stocks to Consider

Kinder Morgan currently carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space are Crescent Point Energy Corp. CPG, Matrix Service Company MTRX and Shell Midstream Partners LP SHLX. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Crescent beat the Zacks Consensus Estimate in three of the prior four quarters, the average positive earnings surprise being 235.1%.

Matrix Service has managed to beat the Zacks Consensus Estimate for earnings in three of the past four quarters.

Shell Midstream has average positive earnings surprise of 3.8% for the past four quarters.

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