Kinder Morgan Earnings, Revenues Solid, Forecast on Target

Kinder Morgan Inc. (NYSE: KMI) reported third-quarter 2017 results after markets closed Wednesday. The midstream giant posted adjusted earnings per share (EPS) of $0.15 per share on revenues of $3.28 billion. In the same period a year ago KMI posted EPS of $0.15 on revenues of $3.33 billion. Consensus estimates called for EPS of $0.15 and revenues of $3.25 billion for the quarter.

Kinder Morgan reiterated its plan to pay its current $0.125 per share quarterly dividend in 2017 before raising the amount to $0.20 per quarter next year. The company also plans to use its cash in excess of dividend payments fully to fund growth investments and strengthening its balance sheet.

The company reported third-quarter net income of $334 million, compared to a net loss of $227 million for the third quarter of 2016, and distributable cash flow (DCF) of $1.06 billion, down slightly from $1.08 billion for the comparable period in 2016.

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For 2017, Kinder Morgan’s budget was set to declare dividends of $0.50 per common share, achieve DCF of approximately $4.46 billion ($1.99 per common share) and adjusted EBITDA of approximately $7.2 billion. KMI also budgeted to invest $3.2 billion in growth projects during 2017, to be funded with internally generated cash flow without the need to access equity markets, and to end the year with a net debt-to-adjusted EBITDA ratio of approximately 5.4 times.

The company will meet its dividend target and its DCF is “forecasted to be on plan.” Growth capital spending is set to total $3.1 billion and net debt-to-adjusted EBITDA is expected to close the year at 5.2x, slightly better than plan.

President and CEO Steve Kean said:

We continue to drive future growth by completing significant infrastructure development projects that we track as part of our project backlog. Our current project backlog is essentially flat quarter-to-quarter at $12.0 billion, with the small decrease primarily due to projects going into service. Excluding the CO2 segment projects, we expect the projects in our backlog to generate an average capital-to-EBITDA multiple of approximately 6.8 times.

Analysts are looking for fourth-quarter EPS of $0.18 and full-year EPS of $0.64. Revenues are forecast at $3.39 billion for the fourth quarter and $13.57 billion for the full year.

Shares closed down about 0.5% on Wednesday at $18.58 and traded up about 1.1% at $18.80 in the after hours session. The 52-week range is $18.23 to $23.01 and the 12-month consensus price target is $24.11.

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