Kinder Morgan (KMI) Q4 Earnings & Revenues Beat Estimates

Kinder Morgan, Inc. KMI reported fourth-quarter 2020 adjusted earnings per share of 27 cents, beating the Zacks Consensus Estimate of 24 cents. The bottom line also increased from the year-ago quarter’s profit of 26 cents.  The strong quarterly earnings were aided by contributions from the Texas Intrastate systems and Natural Gas Pipeline of America (NGPL). This was offset partially by lower demand for terminal assets.

Total revenues declined to $3,115 million from $3,352 million in the prior-year quarter but beat the Zacks Consensus Estimate of $3,056 million.

Kinder Morgan, Inc. Price and EPS Surprise

 

Kinder Morgan, Inc. Price and EPS Surprise

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

Segment Analysis

Natural Gas Pipelines: Adjusted earnings before depreciation, depletion and amortization expenses, including amortization of excess cost of equity investments (EBDA), in the December quarter of 2020 were down 5% to $1,189 million from $1,248 million a year ago. Lower transportation and gathering volumes affected the performance. The increase in contributions from the Texas Intrastate systems and NGPL made up for the underperformance partially.

Products Pipelines: The segment’s adjusted EBDA in the fourth quarter was $258 million, reflecting a decline of 20% from $322 million a year ago. Owing to reduced demand volumes of refined product and crude & condensate were lower, which in turn affected the unit.

Terminals: Through this segment, Kinder Morgan generated quarterly adjusted EBDA of $258 million, down 11% from the year-ago period. Lower demand for terminal assets owing to the pandemic led to the dismal performance.

CO2: The segment’s EBDA decreased 10% to $167 million from $185 million a year ago owing to a drop in crude production and CO2 sales volumes. The decline was partially compensated by increased realized crude prices and a decrease in operating expenditures.

Operational Highlights

Expenses related to operations and maintenance totaled $606 million, down from $679 million a year ago. However, total operating costs increased to $2,135 million in the fourth quarter from $1,421 million in the corresponding period of 2019.

Quarterly operating income amounted to $980 million, down from $1,931 million a year ago.

DCF

The company’s fourth-quarter distributable cash flow (DCF) declined to $1,250 million from $1,354 million a year ago.

Balance Sheet

As of Dec 31, 2020, Kinder Morgan reported $1,184 million in cash and cash equivalents. The company’s long-term debt amounted to $30,838 million at quarter-end. Total debt-to-capitalization ratio at the end of the fourth quarter was 51.2%.

2021 Guidance

The midstream infrastructure provider expects its board of directors to hike dividend payment for 2021 by 3% to $1.08 per share (annualized). Notably, Kinder Morgan projects 2021 net income of $2.1 billion or earnings of 92 cents per share. The company also projects DCF for this year at roughly $4.4 billion. In 2021, the leading North American energy infrastructure company is planning to invest $800 million in expansion projects and contributions to joint ventures.

Zacks Rank & Key Picks

Headquartered in Houston, TX, Kinder Morgan currently carries a Zacks Rank #4 (Sell). Meanwhile, some better-ranked players in the energy space include Viper Energy Partners LP VNOM, DCP Midstream, LP DCP and Diamondback Energy, Inc. FANG. While Viper Energy carries a Zacks Rank #2 (Buy), DCP Midstream and Diamondback sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Viper Energy has seen upward earnings estimate revisions for 2021 in the past 60 days.

DCP Midstream has seen upward estimate revisions for 2021 earnings in the past 30 days.

Diamondback is likely to see earnings growth of 55% in 2021.

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