http://www.morningstar.com/earnings/54501131-kinder-morgan-inc-kmi-q2-2013.aspx

Kinder Morgan, Inc. KMI
Q2 2013 Earnings Call Transcript

Transcript Call Date 07/17/2013

Operator: Welcome to the Quarterly Earnings Conference Call. All participants will be in a listen-only mode until the question-and-answer portion of today's call. Today's call is being recorded. If you have any objections, please disconnect at this time.

I would now like to turn today's call over to your host, Mr. Rich Kinder, Chairman and CEO of Kinder Morgan. Sir, you may begin.

Richard D. Kinder - Chairman and CEO: Thank you, Irina. Welcome to Kinder Morgan quarterly investor call. As usual, we will be making statements that may fall within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934.

As usual I'll give an overview of the quarter, Kim Dang, our Chief Financial Officer will follow with the financial details and then Steve Kean, our Chief Operating Officer. Kim and I and together with the rest of the executive team will answer any questions that you may have.

The seconder was good for the Kinder Morgan Companies. All three companies increased their distributions, our dividends, and all are on track for a successful full year 2013 and beyond. Let me start with KMI. We increased the dividend to $0.40 a share, that's up 14% from the second quarter of 2012 and we distributed $0.35.

Cash available for dividend actually in this quarter is down compared to the second quarter of 2012 and that's result of the timing of the cash tax payments this year versus last year, which Kim will go into the detail, but we remain on target to meet or exceed our goal of $1.60 declared dividends for our full year 2013 and that compares with $1.40 in 2012 and with our original '13 budget of $1.57. The $1.60 equals a 14% increase in dividends declared, comparing full year '13 to full year '12 and an 18% increase in cash available for dividends year-over-year. I think we’re also well-positioned for future growth. We have about $14 billion now in expansion and JV investments that we are pursuing, the building up across the Kinder Morgan companies.

Turning to KMP; we raised the distribution there to $1.32 a quarter, that’s $5.28 annualized; that’s up 7% from the second quarter of 2012. We had earnings, segment earnings before DD&A of $1.337 billion, that’s up 39% from a year ago.

We had distributable cash flow of $505 million, that’s up 38% from a year. We had distributable cash flow per unit of $1.22, that’s up from $1.07 in the second quarter of 2012 or a 14% increase. The growth at KMP was driven by drop-downs associated with the KMI's 2012 acquisition of the El Paso companies, by assets acquired in the Copano acquisition, which closed on May 1 of this year, by strong oil production in our CO2 segment, and by good results in our Products Pipelines segment.

Now, in our certain items, net income, you’ll see some big numbers, and let me just focus on that for a minute and Kim will go into more detail. You’ll see that we totaled a gain of $383 million principally related to two items. First is a gain of $558 million related to the remeasurement of KMP's original 50% interest in the Eagle Ford joint venture that we had Copano before we bought Copano.

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