Kinder Morgan Inc. (KMI - Analyst Report) reported first-quarter 2015 earnings of 24 cents a share from continuing operations, beating the Zacks Consensus Estimate of 23 cents. However, earnings decreased from 28 cents reported a year ago.

Kinder Morgan Inc. - Earnings Surprise | FindTheCompany

Total revenue for the quarter decreased 11.1% year over year to $3,597.0 million. The reported figure also came below the Zacks Consensus Estimate of $4,180.0 million.

Dividend

Kinder Morgan, however, did not disappoint its investors and raised the quarterly dividend by 14% to 48 cents a share ($1.92 per share annualized) from 42 cents ($1.68 per share annualized) paid in the first quarter of 2014. The dividend is payable on May 15, 2015, to shareholders of record as of Apr 30.

Operational Highlights

Total expenses in the quarter were $2,482.0 million, representing a 14.4% decrease from $2,900.0 million spent in the first quarter of 2014.
Operating income came in at $1,115.0 million, representing a 2.8% decline from the comparable quarter a year ago. Operating margin was approximately 31.0% compared with 28.3% in the year-ago quarter. First-quarter net income was $469.0 million compared with $287.0 million for the comparable quarter in 2014.

Financials

The company reported first-quarter distributable cash flow of $1,242.0 million versus $573.0 million in the year-earlier quarter. The increase is attributable to the KMI merger transactions completed in Nov 2014.

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 Mar 31, 2015 Kinder Morgan reported $259.0 million in cash and cash equivalents, while long-term debt was $39,633.0 million.

Outlook

Kinder Morgan expects to declare dividends of $2.00 per share for 2015, suggesting an approximately 15% increase over the 2014 declared dividend of $1.74.

Our Take

Kinder Morgan is the largest energy infrastructure company in North America. It owns an interest in or operates approximately 84,000 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 $130 billion.

Kinder Morgan currently carries a Zacks Rank #4 (Sell). Better-ranked players from the energy sector include Phillips 66 Partners L.P. (PSXP - Snapshot Report), Western Gas Equity Partners, L.P (WGP - Snapshot Report) and Hallador Energy Company (HNRG - Snapshot Report). All these stocks sport a Zacks Rank #1 (Strong Buy).