Kinder Morgan Inc. (KMI) reported fourth-quarter 2014 earnings of 27 cents a share from continuing operations, failing to meet the Zacks Consensus Estimate of 36 cents. Also, earnings decreased from 33 cents earned a year ago.
Total revenue for the quarter increased 2.0% year over year to $3,951.0 million. The reported figure came below the Zacks Consensus Estimate of $4,425.0 million.
Dividend
Kinder Morgan, however, did not disappoint its investors and raised the quarterly dividend by 10% to 45 cents a share ($1.80 per share annualized) from 41 cents ($1.64 per share annualized) paid in the fourth quarter of 2013. The dividend is payable on Feb 17, 2015, to shareholders of record as of Feb 2.
Operational Highlights
Total expenses in the quarter were $2,995.0 million, representing a 10.4% increase from $2,712.0 million spent in the fourth quarter of 2013.
Operating income came in at $956.0 million, representing 17.6% growth from the comparable quarter a year ago. Operating margin was 24.2% compared with 30.0% in the year-ago quarter. Fourth-quarter net income was $664 million compared with $640 million for the same quarter in 2013.
Financials
The company reported fourth-quarter distributable cash flow of $1,278.0 million versus $482.0 million in the year-earlier quarter. The increase is attributable to the KMI merger transactions, which resulted in the payment of a single dividend to all KMI shareholders in lieu of separate distributions to the former limited partners in Kinder Morgan Energy Partners and El Paso Pipeline Partners.
On Nov 27, 2014, the company announced the acquisition of its three subsidiaries – Kinder Morgan Energy Partners, L.P., Kinder Morgan Management, LLC and El Paso Pipeline Partners, L.P. The combined entity represents the largest energy infrastructure company in North America and the third-largest energy company globally. Further, the acquisition simplified the structure of the Kinder Morgan group of companies, benefiting all shareholders and unitholders.
As of Dec 31, 2014 Kinder Morgan reported $315.0 million in cash and cash equivalents, while long-term debt was $38,212 million.
Our Take
Kinder Morgan is the largest energy infrastructure company in North America. It owns an interest in or operates approximately 80,000 miles of pipelines and 180 terminals. The company’s pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store petroleum products and chemicals, and handle bulk materials like coal and petroleum coke. Kinder Morgan is the largest midstream and third largest energy company in North America with an enterprise value of more than $125 billion.
Kinder Morgan currently carries a Zacks Rank #3 (Hold). Better-ranked players from the energy sector include Cheniere Energy Partners LP. (CQP), Spectra Energy Partners, LP (SEP) and Seadrill Partners LLC (SDLP). All these stocks sport a Zacks Rank #1 (Strong Buy).
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