uploads///Operating Results

Kinder Morgan’s 2Q15 Earning Release: Operating Results


Jul. 28 2015, Published 3:38 p.m. ET

Kinder Morgan’s revenue

Kinder Morgan (KMI) reported its 2Q15 earnings on July 15. In this series, we’ll look at KMI’s 2Q15 operating results, compare actual numbers with analyst estimates and individual segment contributions to 2Q15 operating performance. We’ll also explore the company’s project backlog, its outlook for the rest of 2015, and analyst recommendations.

We’ll begin with an analysis of KMI’s 2Q15 operating results.

KMI’s 2Q15 revenues decreased to $3.463 billion from $3.937 billion in the second quarter of last year, a YoY (year-over-year) decline of ~12%. The revenue decline was mainly due to lower commodity prices affecting some of KMI’s businesses.

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Kinder Morgan’s operating income

The decrease in Kinder Morgan’s 2Q15 revenue was offset by a decrease in the cost of goods sold. But KMI’s 2Q15 operating income still fell versus 2Q14, mainly due to an increase in its DD&A (depreciation, depletion, and amortization) and G&A (general and administrative) expenses. The increase in G&A expenses was mainly driven by its acquisition of Hiland Partners, which was completed in the first quarter of 2015.

Kinder Morgan’s earnings per share

Kinder Morgan’s 2Q15 EPS (earnings per share) was $0.15. KMI’s 2Q15 EPS isn’t comparable with 2Q14 EPS because the latest-quarter EPS includes the effect of the KMI consolidation that was completed in late 2014.

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Kinder Morgan’s dividends

KMI declared a dividend of $0.49 per share for 2Q15. This represents a ~14% YoY (year-over-year) increase and a ~2.1% sequential increase over 1Q15. Dividend per share is driven by growth in distributable cash flows. KMI’s 2Q15 distributable cash flow per share grew 56% YoY.

Key ETFs and stocks

KMI peers Enterprise Product Partners (EPD), Enbridge Energy Partners (EEP), Spectra Energy Partners (SEP), and Energy Transfer Partners (ETP) are yet to release their 2Q15 earnings. Here are the Wall Street estimates for these companies’ YoY 2Q15 distributions:

  • EPD – 5.56%
  • EEP – 3.12%
  • SEP – 9.92%
  • ETP – 10.59%

Together, EPD, Williams Partners (WPZ), EEP, and ETP account for ~28.99% of the Alerian MLP ETF (AMLP). KMI alone constitutes ~4.36% of the Energy Select Sector SPDR Fund (XLE).


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