Kinder Morgan Q3 Earnings Miss Estimates, Revenues Fall Y/Y
Kinder Morgan, Inc. KMI reported third-quarter 2024 adjusted earnings per share of 25 cents, which missed the Zacks Consensus Estimate of 27 cents. The bottom line was flat year over year.
Total quarterly revenues of $3.7 billion missed the Zacks Consensus Estimate of $3.8 billion. The top line decreased from $3.9 billion in the prior-year quarter.
The weak quarterly results were primarily due to lower contributions from the Products Pipelines and CO2 business segments.
Kinder Morgan, Inc. Price, Consensus and EPS Surprise
Kinder Morgan, Inc. price-consensus-eps-surprise-chart | Kinder Morgan, Inc. Quote
Dividend Hike
Kinder Morgan announced a quarterly cash dividend of 28.75 cents per share for the third quarter of 2024 (annualized dividend of $1.15), implying a 2% increase from the third-quarter 2023 level. The dividend is payable on Nov. 15, 2024, to shareholders of record as of Oct. 31, 2024.
Segmental Analysis
Natural Gas Pipelines: In the September-end quarter, adjusted earnings before depreciation, depletion and amortization expenses, including the amortization of the excess cost of equity investments (EBDA), increased to $1.28 billion from $1.19 billion a year ago. The segment's performance benefited from increased contributions from the Texas Intrastate system and additional inputs from the STX Midstream acquisition. However, this was partially offset by reduced contributions from gathering systems due to asset divestitures and lower commodity prices.
Product Pipelines: The segment’s EBDA in the third quarter was $277 million, down from $313 million recorded a year ago. Lower commodity prices and the associated impact on inventory used to support crude and condensate business primarily affected the segment’s performance.
Terminals: Kinder Morgan generated quarterly EBDA of $267 million from the segment, higher than the year-ago period’s $259 million. Liquid terminal expansions and higher rates on Jones Act tankers boosted Terminals. Additionally, the bulk business benefited from increased petroleum coke and fertilizer volumes.
CO2: The segment’s EBDA was $162 million, down from the year-ago quarter’s $175 million. The underperformance was primarily due to lower CO2 sales volumes.
Operational Highlights
Expenses related to operations and maintenance totaled $790 million, up from $738 million registered a year ago. Total operating costs, expenses, and other expenditures fell to $2,684 million from $2,969 million.
Distributable Cash Flow (DCF)
Kinder Morgan’s third-quarter DCF was $1.09 billion compared with $1.09 billion a year ago.
Balance Sheet
As of Sept. 30, 2024, KMI reported $108 million in cash and cash equivalents. At the quarter's end, its long-term debt amounted to $29.8 billion.
Guidance
For 2024, Kinder Morgan projected a net income of $2.7 billion ($1.22 per share), up 15% from the 2023 level. It plans to declare dividends of $1.15 per share, up 2% from the previous figure. The company also projected DCF of $5 billion and Adjusted EBITDA of $8.16 billion, both up 8% year over year.
However, due to lower commodity prices and delays in RNG facilities, Kinder Morgan now expects Adjusted EBITDA and Adjusted EPS to be about 2% and 4% below budget, respectively. Despite this, full-year Adjusted EBITDA and EPS are expected to rise 5% and 9%, respectively, with a Net Debt-to-Adjusted EBITDA ratio of 4.0x.
Zacks Rank & Stocks to Consider
Kinder Morgan currently carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked stocks like Archrock Inc. AROC, PEDEVCO Corp. PED and MPLX LP MPLX. While Archrock and PEDEVCO sport a Zacks Rank #1 (Strong Buy) each at present, MPLX carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.
The Zacks Consensus Estimate for AROC’s 2024 EPS is pegged at $1.04. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days.
PEDEVCO is engaged in the acquisition and development of energy assets in the United States and Pacific Rim countries. PED stands to benefit significantly from its holdings in the Permian Basin, one of the most prolific oil-producing regions in the United States, as well as in the D-J Basin in Colorado, which includes more than 150 high-quality drilling locations.
The Zacks Consensus Estimate for PED’s 2024 EPS is pegged at $0.08. The company has a Value Score of B. It has witnessed upward earnings estimate revisions for 2024 in the past 60 days.
MPLX derives stable fee-based revenues from long-term contracts, with minimal exposure to commodity-price fluctuations. The partnership’s robust capital expenditure forecast for 2024, along with significant expansion initiatives, underscores its commitment to sustainable growth.
The Zacks Consensus Estimate for MPLX’s 2024 EPS is pegged at $4.29. The company has a Value Score of B. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days.
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