- 3Q 2017 Net Income of $33 Million
- 3Q 2017 Adjusted EBITDA of $1.113
Billion
- Williams Partners Placed 4 Transco
Expansions (Gulf Trace, Hillabee Phase 1, Dalton Expansion, and New
York Bay Expansion) Into Service to Date in 2017; Design Capacity
Up 25%
- Company Continues to Significantly
Improve Credit Profile; Consolidated Net Debt (Long-term Debt Less
Cash) Reduced by $3.3 Billion Since Jan. 1, 2017
- Williams Partners Achieved Key
Milestones for Atlantic Sunrise Project
Williams (NYSE: WMB) today announced its financial results for
the three and nine months ended Sept. 30, 2017.
Williams Summary Financial
Information 3Q YTD Amounts in millions, except
per-share amounts. Per share amounts are reported on a diluted
basis. All amounts are attributable to The Williams Companies, Inc.
2017 2016 2017 2016
GAAP Measures Cash Flow from Operations $ 569 $ 628 $
1,837 $ 2,097 Net income (loss) $ 33 $ 61 $ 487 ($409 ) Net income
(loss) per share $ 0.04 $ 0.08 $ 0.59 ($0.55 ) Non-GAAP
Measures (1) Adjusted income from continuing operations $ 124 $ 148
$ 351 $ 320 Adjusted income from continuing operations per share $
0.15 $ 0.20 $ 0.42 $ 0.43 Adjusted EBITDA $ 1,113 $ 1,192 $ 3,371 $
3,313 Cash Flow available for Dividends and other uses $ 355 $ 441
$ 1,095 $ 1,303 Dividend Coverage Ratio 1.43x 2.94x 1.47x 1.17x
(1) Schedules reconciling adjusted income
from continuing operations, adjusted EBITDA, Cash Available for
Dividends and Dividend Coverage Ratio (non-GAAP measures) are
available at www.williams.com and as an attachment to this news
release.
Third-Quarter 2017 Financial Results
Williams reported unaudited third-quarter 2017 net income
attributable to Williams of $33 million, an unfavorable change of
$28 million from third-quarter 2016. The unfavorable change was
driven primarily by the absence of results associated with the
Geismar olefins facility, which was sold July 6, 2017, and our
former Canadian business, which was sold in September 2016. In
addition, results were negatively impacted by impairments of
assets, largely offset by the gain related to the sale of the
Geismar facility.
Year-to-date, Williams reported an unaudited net income of $487
million, an improvement of $896 million over the same period in
2016. The favorable change was driven primarily by increased
fee-based revenues from expansion projects, and gains on the sale
of assets and equity investments. These favorable results were
partially offset by higher impairment losses on assets between the
periods and the decrease related to the previously mentioned sale
of the Geismar olefins facility and the September 2016 sale of our
former Canadian operations. Provision for income taxes also
increased, driven by higher pre-tax income, partially offset by a
$127 million benefit associated with the expected utilization of a
capital loss carryover.
Williams reported third-quarter 2017 Adjusted EBITDA of $1.113
billion, a $79 million decrease from third-quarter 2016. The
unfavorable change was driven primarily by the absence of $101
million of Adjusted EBITDA contribution from the Williams Partners
segment associated with the previously described assets sold.
Williams Partners' remaining businesses increased Adjusted EBITDA
by approximately $13 million including an unfavorable impact of
approximately $8 million from Hurricanes Harvey and Irma.
Year-to-date, Williams reported Adjusted EBITDA of $3.371
billion, an increase of $58 million over the corresponding
nine-month reporting period in 2016. The improvement is primarily
associated with favorable changes in Williams' Other segment. The
Williams Partners segment reported an improvement of $8 million
over the corresponding period with increased Adjusted EBITDA from
current businesses of approximately $118 million, being partially
offset by $110 million of reduced EBITDA resulting from the
previously described assets sold.
CEO Perspective
Alan Armstrong, president and chief executive officer, made the
following comments:
“The large-scale, competitive positions we've established
continue to generate long-term value as evidenced once again this
quarter as we maintained our strong results with year-to-date
Adjusted EBITDA comparable for the Williams Partners segment to
2016 results despite the impact of two hurricanes and the sale of
over $3 billion in assets. We've substantially reduced our direct
exposure to commodities and, as a result, our current businesses'
steady growth is being driven by consistent fee-based revenue
growth.
“Our strategic focus on natural gas volumes continues to deliver
results. So far in 2017, we've placed four of our 'Big 5' Transco
expansion projects into service including Gulf Trace, Hillabee
Phase 1, Dalton Expansion and New York Bay Expansion with the fifth
of the 'Big 5' expansions - the Virginia Southside II project -
expected to be placed in service during fourth-quarter 2017. The
incremental capacity from the fully-contracted Transco expansion
projects going in service so far this year reflects a 25 percent
increase in Transco’s design capacity. And, year-to-date, Transco's
transportation revenues have increased $74 million, a 7 percent
increase over last year.
“Our existing asset footprint and the efficient incremental
expansions available to us have also been highlighted in Williams
Partners' Northeast G&P and West Operating Areas. Our recently
announced agreement to expand our services in the Northeast for our
valued customer, Southwestern Energy, showcases how well-positioned
our Northeast G&P segment is to serve the growing gas
production in the Marcellus and Utica. We are also positioned to
capture growth in the Haynesville where in August, we completed the
Springridge South plant expansion, and in Wyoming where we are able
to bring more volumes onto our Wamsutter system after placing our
Chain Lake compressor station into service in October to meet the
growing demand of a customer.
“I’m also extremely pleased that even as we continue to deliver
on our growth strategy by successfully executing on expansion
projects across our operational map, we have strengthened our
balance sheet and credit profile, significantly reducing our debt
and continued to lower expenses. Year-to-date in 2017, total
adjusted SG&A expenses have been reduced by about $40 million
when compared to the same period in 2016.”
Business Segment Results
Williams’ business segments for financial reporting are Williams
Partners and Other. In September 2016, Williams announced
organizational changes aiming to simplify our structure, increase
direct operational alignment to advance our natural gas-focused
strategy, and drive continued focus on customer service and
execution. Effective, Jan. 1, 2017, Williams implemented these
changes which combined the management of certain of our operations
and reduced the overall number of operating areas managed within
our business. As a result of this realignment and the sale of our
Canadian operations, the Williams NGL & Petchem Services
reporting segment has been eliminated and the remaining assets are
reported with Other.
Williams
Modified and Adjusted
EBITDA Amounts in millions
3Q 2017 3Q
2016 YTD 2017 YTD
2016 Modified
EBITDA
Adjust.
AdjustedEBITDA Modified
EBITDA
Adjust. Adjusted
EBITDA
Modified
EBITDA
Adjust. Adjusted
EBITDA
Modified
EBITDA
Adjust. Adjusted
EBITDA
Williams Partners $ 1,000 $ 101 $ 1,101
$ 1,070 $ 119 $ 1,189 $ 3,208
$ 114 $ 3,322 $ 2,629 $ 685
$ 3,314 Other (61 ) 73
12 (67 ) 70
3 (60 ) 109
49 (534 ) 533
(1 ) Totals $ 939 $ 174 $
1,113 $ 1,003 $ 189 $ 1,192 $
3,148 $ 223 $ 3,371 $ 2,095
$ 1,218 $ 3,313
Definitions of modified EBITDA and adjusted EBITDA and schedules
reconciling to net income are included in this news release.
Williams Partners Segment
Comprised of our consolidated master limited partnership, WPZ,
Williams Partners segment includes gas pipeline and midstream
businesses. The gas pipeline business includes interstate natural
gas pipelines and pipeline joint project investments. The midstream
business provides natural gas gathering, treating, processing and
compression services; NGL production, fractionation, storage,
marketing and transportation; deepwater production handling and
crude oil transportation services; and is comprised of several
wholly owned and partially owned subsidiaries and joint project
investments.
Williams Partners reported third-quarter 2017 Modified EBITDA of
$1 billion, a decrease of $70 million from third-quarter 2016.
Adjusted EBITDA decreased by $88 million to $1.101 billion. The
unfavorable change in Modified EBITDA was driven primarily by the
absence of results associated with the Geismar olefins facility,
which was sold July 6, 2017, and the partnership's former Canadian
business, which was sold in September 2016. In addition, results
were negatively impacted by impairments of assets, largely offset
by the gain related to the sale of the Geismar facility. The
impairments and gain on sale are excluded from Adjusted EBITDA. The
current year also reflected an unfavorable impact of approximately
$8 million from Hurricanes Harvey and Irma.
Year-to-date, Williams Partners reported Modified EBITDA of
$3.208 billion, an increase of $579 million over the same
nine-month reporting period in 2016. Adjusted EBITDA was $3.322
billion, an $8 million increase over the corresponding nine-month
reporting period. The favorable change in Modified EBITDA was
driven primarily by increased fee-based revenues from expansion
projects and gains on the sale of assets and equity investments.
The current year also benefited from improved commodity margins,
higher fee-based revenues, lower selling, general and
administrative (SG&A) expenses and increased proportional
EBITDA from joint ventures. These favorable results were partially
offset by higher impairment losses on assets between the periods
and the reduced contribution related to the previously mentioned
sales.
Williams Partners’ complete financial results for third-quarter
2017 are provided in the earnings news release issued today by
Williams Partners.
Other Segment
Williams’ Other segment reported third-quarter 2017 Modified
EBITDA of ($61) million, an improvement of $6 million from
third-quarter 2016 due primarily to the absence of unfavorable
results from certain former Canadian operations that were sold in
September 2016, partially offset by a $68 million impairment of an
NGL pipeline in the Gulf Coast region in 2017. Adjusted EBITDA
realized a $9 million improvement to $12 million.
Year-to-date, Williams’ Other segment reported Modified EBITDA
of ($60) million, an increase of $474 million primarily reflecting
the absence of a $406 million impairment charge in 2016 associated
with our former Canadian business, partially offset by $91 million
of impairments in 2017, including the previously described
impairment of an NGL pipeline. The increase also reflects the
absence of unfavorable results from our former Canadian operations
and a decrease in expenses associated with our evaluation of
strategic alternatives. Adjusted EBITDA realized a $50 million
improvement to $49 million.
Atlantic Sunrise Update
On Sept. 18, 2017, Williams Partners reported that construction
is now underway in Pennsylvania on the greenfield portion of the
Atlantic Sunrise pipeline project - an expansion of the existing
Transco natural gas pipeline to connect abundant Marcellus gas
supplies with markets in the Mid-Atlantic and Southeastern U.S. The
partnership anticipates pipeline and compressor station
construction to last approximately 10 months, weather permitting.
Additionally, Williams Partners also placed a portion of the
project into early service on Sept. 1, 2017, providing 400,000
dth/day of firm transportation service on Transco's existing
mainline facilities to various delivery points as far south as
Choctaw County, Alabama. The partial service milestone is the
result of recently completed modifications to existing Transco
facilities in Virginia and Maryland designed to further accommodate
bi-directional flow on the existing Transco pipeline system.
Additional Notable Recent Accomplishments
On Oct. 12, 2017, Williams Partners announced the execution of
agreements with Southwestern Energy Company (NYSE: SWN)
(“Southwestern”) to expand its services to Southwestern in the
Appalachian Basin of West Virginia where Williams Partners has
established a strong operational footprint. The agreements call for
Williams Partners to deliver gas processing, fractionation, and
liquids handling services in Southwestern’s Wet Gas Acreage in the
Marcellus and Upper Devonian Shale along with gas gathering
services for Southwestern in its South Utica Dry Gas Acreage.
Williams Partners will provide Southwestern with 660 million cubic
feet per day (MMcf/d) of processing capacity to serve a
135,000-acre dedication in Southwestern’s Wet Gas Acreage in the
Marcellus and Upper Devonian Shale in Marshall and Wetzel counties
in West Virginia. As a result of this agreement, Williams Partners
expects to further build out its Oak Grove processing facility for
Southwestern’s expanding production of wet gas. The Oak Grove
processing facility has the ability to expand by an additional 1.8
Bcf/d of gas processing capacity.
On Oct. 9, 2017, Williams Partners announced that it has placed
into service an expansion of its Transco pipeline system to
increase natural gas delivery capacity to New York City by 115,000
dekatherms per day in time for the 2017/2018 heating
season. The New York Bay Expansion provides additional firm
transportation capacity for much-needed incremental natural gas
supplies to National Grid, the largest distributor of natural gas
in the northeastern U.S. The company provides service to 1.8
million customers in Brooklyn, Queens, Staten Island and Long
Island. The New York Bay Expansion is the fourth of Williams
Partners’ projected five fully-contracted Transco expansion
projects to be placed into service this year, combining with Gulf
Trace, Hillabee Phase 1 and the Dalton Expansion to add more than
2.5 million dekatherms per day capacity to the Transco pipeline
system so far in 2017. The partnership continues to target a
fourth-quarter 2017 in-service date for its fifth Transco expansion
this year - the Virginia Southside II project.
Williams' Credit Profile Improvement including Debt Reduction
Update
The company continued to strengthen its balance sheet and credit
profile during the quarter with $144 million reduction of the
Williams Companies' corporate-level debt in addition to the nearly
$2.1 billion debt reduction at Williams Partners. As of the
end of third-quarter 2017, Williams had corporate level debt of
$4.6 billion, in addition to Williams Partners' debt of $16.5
billion. Year-to-date, consolidated cash and cash equivalents
increased by $1.0 billion to $1.17 billion, which the company
intends to use primarily to fund growth capital expenditures and
long-term investments at Williams Partners.
Guidance
The Guidance previously provided at our Analyst Day event on May
11, 2017, remains unchanged. Williams plans to announce its 2018
Guidance as part of the release of its fourth-quarter 2017
financial results.
Williams’ Third-Quarter 2017 Materials to be Posted Shortly;
Q&A Webcast Scheduled for Tomorrow
Williams’ third-quarter 2017 financial results package will be
posted shortly at www.williams.com.
Note: the analyst package is included at the back of this news
release.
Williams and Williams Partners will host a joint Q&A live
webcast on Thursday, Nov. 2 at 9:30 a.m. Eastern Time (8:30 a.m.
Central Time). A limited number of phone lines will be available at
(877) 830-2641. International callers should dial (785) 424-1809.
The conference ID is 8089866. The link to the webcast, as well as
replays of the webcast, will be available for at least 90 days
following the event at www.williams.com.
Form 10-Q
The company plans to file its third-quarter 2017 Form 10-Q with
the Securities and Exchange Commission (SEC) this week. Once filed,
the document will be available on both the SEC and Williams
websites.
Non-GAAP Measures
This news release may include certain financial measures –
Adjusted EBITDA, adjusted income (“earnings”), adjusted earnings
per share, cash available for dividends and other uses, WMB
economic DCF, dividend coverage ratio, and economic coverage ratio
– that are non-GAAP financial measures as defined under the rules
of the SEC.
Our segment performance measure, Modified EBITDA, is defined as
net income (loss) before income (loss) from discontinued
operations, income tax expense, net interest expense, equity
earnings from equity-method investments, other net investing
income, impairments of equity investments and goodwill,
depreciation and amortization expense, and accretion expense
associated with asset retirement obligations for nonregulated
operations. We also add our proportional ownership share (based on
ownership interest) of Modified EBITDA of equity-method
investments.
Adjusted EBITDA further excludes items of income or loss that we
characterize as unrepresentative of our ongoing operations.
Management believes these measures provide investors meaningful
insight into results from ongoing operations.
Cash available for dividends and other uses is defined as cash
received from our ownership in WPZ and Adjusted EBITDA from our
Other segment, less interest, taxes and maintenance capital
expenditures associated with our Other segment. We also calculate
the ratio of cash available for dividends to the total cash
dividends paid (dividend coverage ratio). This measure reflects our
cash available for dividends relative to actual cash dividends
paid. We further adjust these metrics to include Williams’
proportional share of WPZ’s distributable cash flow in excess of
distributions, resulting in WMB economic DCF and economic coverage
ratio.
This news release is accompanied by a reconciliation of these
non-GAAP financial measures to their nearest GAAP financial
measures. Management uses these financial measures because they are
accepted financial indicators used by investors to compare company
performance. In addition, management believes that these measures
provide investors an enhanced perspective of the operating
performance of the Company’s assets and the cash that the business
is generating.
Neither Adjusted EBITDA, adjusted income, or cash available for
dividends and other uses are intended to represent cash flows for
the period, nor are they presented as an alternative to net income
or cash flow from operations. They should not be considered in
isolation or as substitutes for a measure of performance prepared
in accordance with United States generally accepted accounting
principles.
About Williams
Williams (NYSE: WMB) is a premier provider of large-scale
infrastructure connecting U.S. natural gas and natural gas products
to growing demand for cleaner fuel and feedstocks. Headquartered in
Tulsa, Okla., Williams owns approximately 74 percent of Williams
Partners L.P. (NYSE: WPZ). Williams Partners is an
industry-leading, large-cap master limited partnership with
operations across the natural gas value chain including gathering,
processing and interstate transportation of natural gas and natural
gas liquids. With major positions in top U.S. supply basins,
Williams Partners owns and operates more than 33,000 miles of
pipelines system wide – including the nation’s largest volume and
fastest growing pipeline – providing natural gas for clean-power
generation, heating and industrial use. Williams Partners’
operations touch approximately 30 percent of U.S. natural gas.
www.williams.com
Forward-Looking Statements
The reports, filings, and other public announcements of The
Williams Companies, Inc. (Williams) may contain or incorporate by
reference statements that do not directly or exclusively relate to
historical facts. Such statements are “forward-looking statements”
within the meaning of Section 27A of the Securities Act of
1933, as amended (Securities Act), and Section 21E of the
Securities Exchange Act of 1934, as amended (Exchange Act). These
forward-looking statements relate to anticipated financial
performance, management’s plans and objectives for future
operations, business prospects, outcome of regulatory proceedings,
market conditions, and other matters. We make these forward-looking
statements in reliance on the safe harbor protections provided
under the Private Securities Litigation Reform Act of 1995.
All statements, other than statements of historical facts,
included herein that address activities, events or developments
that we expect, believe or anticipate will exist or may occur in
the future, are forward-looking statements. Forward-looking
statements can be identified by various forms of words such as
“anticipates,” “believes,” “seeks,” “could,” “may,” “should,”
“continues,” “estimates,” “expects,” “forecasts,” “intends,”
“might,” “goals,” “objectives,” “targets,” “planned,” “potential,”
“projects,” “scheduled,” “will,” “assumes,” “guidance,” “outlook,”
“in-service date” or other similar expressions. These
forward-looking statements are based on management’s beliefs and
assumptions and on information currently available to management
and include, among others, statements regarding:
- Expected levels of cash distributions
by Williams Partners L.P. (WPZ) with respect to limited partner
interests;
- Levels of dividends to Williams
stockholders;
- Future credit ratings of Williams, WPZ,
and their affiliates;
- Amounts and nature of future capital
expenditures;
- Expansion and growth of our business
and operations;
- Expected in-service dates for capital
projects;
- Financial condition and liquidity;
- Business strategy;
- Cash flow from operations or results of
operations;
- Seasonality of certain business
components;
- Natural gas and natural gas liquids
prices, supply, and demand;
- Demand for our services.
Forward-looking statements are based on numerous assumptions,
uncertainties and risks that could cause future events or results
to be materially different from those stated or implied herein.
Many of the factors that will determine these results are beyond
our ability to control or predict. Specific factors that could
cause actual results to differ from results contemplated by the
forward-looking statements include, among others, the
following:
- Whether WPZ will produce sufficient
cash flows to provide expected levels of cash distributions;
- Whether we are able to pay current and
expected levels of dividends;
- Whether WPZ elects to pay expected
levels of cash distributions and we elect to pay expected levels of
dividends;
- Whether we will be able to effectively
execute our financing plan;
- Whether we will be able to effectively
manage the transition in our board of directors and management as
well as successfully execute our business restructuring;
- Availability of supplies, including
lower than anticipated volumes from third parties served by our
business, and market demand;
- Volatility of pricing including the
effect of lower than anticipated energy commodity prices and
margins;
- Inflation, interest rates, and general
economic conditions (including future disruptions and volatility in
the global credit markets and the impact of these events on
customers and suppliers);
- The strength and financial resources of
our competitors and the effects of competition;
- Whether we are able to successfully
identify, evaluate and timely execute our capital projects and
other investment opportunities in accordance with our forecasted
capital expenditures budget;
- Our ability to successfully expand our
facilities and operations;
- Development and rate of adoption of
alternative energy sources;
- The impact of operational and
developmental hazards, unforeseen interruptions, and the
availability of adequate insurance coverage;
- The impact of existing and future laws,
regulations, the regulatory environment, environmental liabilities,
and litigation, as well as our ability to obtain necessary permits
and approvals, and achieve favorable rate proceeding outcomes;
- Our costs and funding obligations for
defined benefit pension plans and other postretirement benefit
plans;
- Changes in maintenance and construction
costs;
- Changes in the current geopolitical
situation;
- Our exposure to the credit risk of our
customers and counterparties;
- Risks related to financing, including
restrictions stemming from debt agreements, future changes in
credit ratings as determined by nationally-recognized credit rating
agencies and the availability and cost of capital;
- The amount of cash distributions from
and capital requirements of our investments and joint ventures in
which we participate;
- Risks associated with weather and
natural phenomena, including climate conditions and physical damage
to our facilities;
- Acts of terrorism, including
cybersecurity threats, and related disruptions;
- Additional risks described in our
filings with the Securities and Exchange Commission (SEC).
Given the uncertainties and risk factors that could cause our
actual results to differ materially from those contained in any
forward-looking statement, we caution investors not to unduly rely
on our forward-looking statements. We disclaim any obligations to
and do not intend to update the above list or announce publicly the
result of any revisions to any of the forward-looking statements to
reflect future events or developments.
In addition to causing our actual results to differ, the factors
listed above may cause our intentions to change from those
statements of intention set forth herein. Such changes in our
intentions may also cause our results to differ. We may change our
intentions, at any time and without notice, based upon changes in
such factors, our assumptions, or otherwise.
Because forward-looking statements involve risks and
uncertainties, we caution that there are important factors, in
addition to those listed above, that may cause actual results to
differ materially from those contained in the forward-looking
statements. For a detailed discussion of those factors, see Part I,
Item 1A. Risk Factors in our Annual Report on Form 10-K filed with
the SEC on February 22, 2017.
Williams
Non-GAAP Reconciliations, Financial Highlights,
and Operating Statistics (UNAUDITED) Final
September 30, 2017
Reconciliation of Income (Loss)
Attributable to The Williams Companies, Inc. to Adjusted Income
(UNAUDITED)
2016 2017 (Dollars in millions,
except per-share amounts) 1st Qtr 2nd
Qtr 3rd Qtr 4th Qtr Year
1st Qtr 2nd Qtr 3rd Qtr
Year
Income (loss)
attributable to The Williams Companies, Inc. available to common
stockholders $ (65 ) $ (405 ) $ 61
$ (15 ) $ (424 ) $ 373
$ 81 $ 33 $
487
Income (loss) - diluted earnings (loss) per
common share $ (.09 ) $ (.54 ) $
.08 $ (.02 ) $ (.57 ) $ .45
$ .10 $ .04
$ .59
Adjustments:
Williams
Partners
Estimated minimum volume commitments $ 60 $ 64 $ 70 $ (194 ) $ — $
15 $ 15 $ 18 $ 48 Impairment of certain assets — 389 — 22 411 — —
1,142 1,142 Ad valorem obligation timing adjustment — — — — — — — 7
7 Organizational realignment-related costs — — — 24 24 4 6 6 16
Loss related to Canada disposition — — 32 2 34 (3 ) (1 ) 4 —
Severance and related costs 25 — — 12 37 9 4 5 18 Constitution
Pipeline project development costs — 8 11 9 28 2 6 4 12 Potential
rate refunds associated with rate case litigation 15 — — — 15 — — —
— ACMP Merger and transition costs 5 — — — 5 — 4 3 7 Share of
impairment at equity-method investments — — 6 19 25 — — 1 1 Gain on
asset retirement — — — (11 ) (11 ) — — (5 ) (5 ) Geismar Incident
adjustments — — — (7 ) (7 ) (9 ) 2 8 1 Gain on sale of Geismar
Interest — — — — — — — (1,095 ) (1,095 ) Gains from contract
settlements and terminations — — — — — (13 ) (2 ) — (15 ) Accrual
for loss contingency — — — — — 9 — — 9 Gain on early retirement of
debt — — — — — (30 ) — 3 (27 ) Gain on sale of RGP Splitter — — — —
— — (12 ) — (12 ) Expenses associated with Financial Repositioning
— — — — — — 2 — 2 Expenses associated with strategic asset
monetizations — —
— 2
2 1 4
— 5 Total
Williams Partners adjustments 105 461 119 (122 ) 563 (15 ) 28 101
114
Other
Impairment of certain assets — 406 — 8 414 — 23 68 91 Loss related
to Canada disposition — — 33 (1 ) 32 1 — — 1 Canadian PDH facility
project development costs 34 11 16 — 61 — — — — Gain on sale of
certain assets (10 ) — — — (10 ) — — — — Expenses associated with
strategic alternatives 6 13 21 7 47 1 3 5 9 ACMP Merger and
transition costs 2 — — — 2 — — — — Severance and related costs 1 —
— 4 5 — — — — Expenses associated with Financial Repositioning
— —
— — —
8 —
— 8 Total Other
adjustments 33 430
70 18
551 10 26
73 109
Adjustments included in Modified EBITDA 138 891 189 (104 )
1,114 (5 ) 54 174 223
Adjustments below
Modified EBITDA
Impairment of equity-method investments - Williams Partners 112 — —
318 430 — — — — Gain on disposition of equity-method investment -
Williams Partners — — (27 ) — (27 ) (269 ) — — (269 ) Interest
expense related to potential rate refunds associated with rate case
litigation - Williams Partners 3 — — — 3 — — — — Accelerated
depreciation related to reduced salvage value of certain assets -
Williams Partners — — — 4 4 — — — — Change in depreciable life
associated with organizational realignment - Williams Partners — —
— (16 ) (16 ) (7 ) — — (7 ) Interest income on receivable from sale
of Venezuela assets - Other (18 ) (18 ) — — (36 ) — — — —
Allocation of adjustments to noncontrolling interests (83 )
(154 ) (41 )
(76 ) (354 ) 77
(10 ) (28 )
39 14 (172 ) (68 ) 230 4 (199 ) (10 ) (28 ) (237 )
Total adjustments 152 719 121 126 1,118 (204 ) 44 146 (14 )
Less tax effect for above items (61 ) (202 ) (39 ) 19 (283 ) 77 (17
) (55 ) 5 Adjustments for tax-related items (1) — 34 5 — 39 (127 )
— — (127 )
Adjusted income
available to common stockholders $ 26 $
146 $ 148 $ 130
$ 450 $ 119 $ 108
$ 124 $ 351
Adjusted
diluted earnings per common share (2) $ .03
$ .19 $ .20
$ .17 $ .60 $ .14
$ .13 $ .15 $ .42
Weighted-average shares - diluted (thousands) 751,040
751,297 751,858 752,818 751,761 826,476 828,575 829,368 828,150 (1)
The second and third quarters of 2016 include a favorable
adjustment related to the reversal of a cumulative anticipatory
foreign tax credit. The first quarter of 2017 includes an
unfavorable adjustment related to the release of a valuation
allowance. (2) The sum of earnings per share for the quarters may
not equal the total earnings per share for the year due to changes
in the weighted-average number of common shares outstanding.
Reconciliation of "Net Income (Loss)"
to “Modified EBITDA” and Non-GAAP “Adjusted EBITDA”
(UNAUDITED)
2016 2017 (Dollars in millions)
1st Qtr 2nd Qtr 3rd Qtr
4th Qtr Year 1st Qtr 2nd
Qtr 3rd Qtr Year
Net income
(loss) $ (13 ) $ (505 ) $ 131
$ 37 $ (350 ) $ 569 $ 193
$ 125 $ 887 Provision (benefit) for
income taxes 2 (145 ) 69 49 (25 ) 37 65 24 126 Interest expense 291
298 297 293 1,179 280 271 267 818 Equity (earnings) losses (97 )
(101 ) (104 ) (95 ) (397 ) (107 ) (125 ) (115 ) (347 ) Impairment
of equity-method investments 112 — — 318 430 — — — — Other
investing (income) loss - net (18 ) (18 ) (28 ) 1 (63 ) (272 ) (2 )
(4 ) (278 ) Proportional Modified EBITDA of equity-method
investments 189 191 194 180 754 194 215 202 611 Depreciation and
amortization expenses 445 446 435 437 1,763 442 433 433 1,308
Accretion for asset retirement obligations associated with
nonregulated operations 7 8
9 7
31 7
9 7 23
Modified EBITDA $ 918
$ 174 $
1,003 $ 1,227
$ 3,322 $ 1,150
$ 1,059
$ 939 $ 3,148
Williams Partners $ 955 $ 604 $ 1,070 $ 1,235 $ 3,864
$ 1,132 $ 1,076 $ 1,000 $ 3,208 Other (37 )
(430 ) (67 ) (8 )
(542 ) 18
(17 ) (61 ) (60 )
Total Modified EBITDA $ 918
$ 174 $
1,003 $ 1,227
$ 3,322 $ 1,150
$ 1,059
$ 939 $ 3,148
Adjustments included in Modified EBITDA
(1): Williams Partners $ 105 $ 461 $ 119 $
(122 ) $ 563 $ (15 ) $ 28 $ 101 $ 114 Other 33
430 70
18 551 10
26 73
109
Total Adjustments
included in Modified EBITDA $ 138
$ 891 $ 189
$ (104 )
$ 1,114 $ (5 )
$ 54 $ 174
$ 223 Adjusted
EBITDA: Williams Partners $ 1,060 $ 1,065 $ 1,189 $
1,113 $ 4,427 $ 1,117 $ 1,104 $ 1,101 $ 3,322 Other (4 )
— 3
10 9 28
9 12
49
Total Adjusted EBITDA
$ 1,056 $ 1,065
$ 1,192
$ 1,123 $ 4,436
$ 1,145 $
1,113 $ 1,113
$ 3,371 (1) Adjustments
by segment are detailed in the "Reconciliation of Income (Loss)
Attributable to The Williams Companies, Inc. to Adjusted Income,"
which is also included in these materials.
Dividend Coverage Ratio
(UNAUDITED)
2016 2017 (Dollars in millions,
except per share amounts) 1st Qtr 2nd
Qtr 3rd Qtr 4th Qtr Year
1st Qtr 2nd Qtr 3rd Qtr
Year
Distributions from WPZ (accrued / “as declared” basis) (1) $
513 $ 513 $ 522
$ 597 $ 2,145 $ 421
$ 421 $ 421
$ 1,263 Other Segment Adjusted EBITDA (2) (14 )
(12 ) (13 ) (4 )
(43 ) 28 9 12 49
Corporate interest (66 ) (67 )
(68 ) (67 )
(268 ) (66 ) (65 )
(66 ) (197 ) Subtotal 433 434 441 526 1,834
383 365 367 1,115 WMB cash tax rate 0 % -1 % 0 % 1 % 0 % 0 % 0 % 2
% 1 % WMB cash taxes (excludes cash taxes paid by WPZ) 2 3 — (7 )
(2 ) — — (7 ) (7 ) Other Segment Maintenance Capital (6 )
(4 ) —
(1 ) (11 ) (3 )
(5 ) (5 )
(13 ) WMB cash available for dividends and other uses (3) $ 429 $
433 $ 441 $ 518 $ 1,821 $ 380 $ 360 $ 355 $ 1,095 WMB dividends
paid (480 ) (481 )
(150 ) (150 ) (1,261 )
(248 ) (248 ) (248
) (744 ) Excess cash available after dividends
$ (51 ) $ (48 ) $ 291 $ 368 $ 560 $ 132 $ 112 $ 107 $ 351
Dividend per share $ 0.6400 $ 0.6400 $ 0.2000 $ 0.2000 $ 1.6800 $
0.3000 $ 0.3000 $ 0.3000 $ 0.9000 Coverage ratio (1)(4) 0.89
0.90 2.94 3.45 1.44 1.53 1.45 1.43 1.47 (1) Cash
distributions for the first quarter of 2016 was increased by $10
million in order to exclude the impact of the IDR waiver associated
with the WPZ merger termination fee from the determination of
coverage ratios. Cash distributions for the third quarter of 2016
was increased by $150 million in order to exclude the impact of the
IDR waiver associated with the sale of the Canadian operations. (2)
For periods prior to 2017, includes only former Williams NGL &
Petchem Services segment. (3) As previously announced, effective
with the third quarter of 2016, Williams reduced its regular
dividend from $0.64 per share to $0.20 per share to support
Williams' plan to reinvest a portion of the cash available for
dividends and other uses into Williams Partners. Effective with the
first quarter of 2017, Williams increased its regular dividend from
$0.20 per share to $0.30 per share as part of the Financial
Repositioning announced in the first quarter of 2017. (4) WMB cash
available for dividends and other uses / WMB dividends paid.
Consolidated Statement of Operations
(UNAUDITED)
2016 2017 (Dollars in millions,
except per-share amounts) 1st Qtr 2nd
Qtr 3rd Qtr 4th Qtr Year
1st Qtr 2nd Qtr 3rd Qtr
Year
Revenues:
Service revenues $
1,229 $ 1,202 $ 1,247 $ 1,493 $ 5,171 $ 1,261 $ 1,282 $ 1,310 $
3,853 Product sales 431 534
658 705
2,328 727
642 581
1,950 Total revenues 1,660
1,736 1,905
2,198 7,499
1,988 1,924
1,891 5,803 Costs and
expenses: Product costs 318 401 461 545 1,725 579 537 504 1,620
Operating and maintenance expenses 391 394 394 401 1,580 368 389
400 1,157 Depreciation and amortization expenses 445 446 435 437
1,763 442 433 433 1,308 Selling, general, and administrative
expenses 221 158 177 167 723 161 153 138 452 Gain on sale of
Geismar Interest — — — — — — — (1,095 ) (1,095 ) Impairment of
certain assets 8 802 1 62 873 1 25 1,210 1,236 Other (income)
expense - net 15 23
92 5
135 4 6
24 34
Total costs and expenses 1,398
2,224 1,560
1,617 6,799 1,555
1,543 1,614
4,712
Operating income
(loss) 262 (488 ) 345 581
700 433 381 277 1,091 Equity
earnings (losses) 97 101 104 95 397 107 125 115 347 Impairment of
equity-method investments (112 ) — — (318 ) (430 ) — — — — Other
investing income (loss) - net 18 18 28 (1 ) 63 272 2 4 278 Interest
incurred (306 ) (306 ) (304 ) (301 ) (1,217 ) (287 ) (280 ) (275 )
(842 ) Interest capitalized 15 8 7 8 38 7 9 8 24 Other income
(expense) - net 15 17
20 22
74 74
21 20
115 Income (loss) before income taxes (11 ) (650 )
200 86 (375 ) 606 258 149 1,013 Provision (benefit) for income
taxes 2 (145 )
69 49
(25 ) 37 65
24 126
Net
income (loss) (13 ) (505 )
131 37 (350 ) 569 193
125 887 Less: Net income (loss) attributable to
noncontrolling interests 52 (100
) 70 52
74 196
112 92
400
Net income (loss) attributable to The Williams
Companies, Inc. $ (65 )
$ (405 ) $ 61
$ (15 )
$ (424 ) $ 373
$ 81 $ 33
$ 487 Diluted
earnings (loss) per common share:
Net income (loss)
(1) $ (.09 ) $ (.54
) $ .08 $ (.02 ) $
(.57 ) $ .45 $ .10
$ .04 $ .59 Weighted-average
number of shares (thousands) 750,322 750,649 751,858 750,954
750,673 826,476 828,575 829,368 828,150 Common shares
outstanding at end of period (thousands) 750,484 750,599 750,757
750,934 750,934 826,239 826,398 826,723 826,723 Market price per
common share (end of period) $ 16.07 $ 21.63 $ 30.73 $ 31.14 $
31.14 $ 29.59 $ 30.28 $ 30.01 $ 30.01 Cash dividends declared per
share $ .64 $ .64 $ .20 $ .20 $ 1.68 $ .30 $ .30 $ .30 $ .90 (1)
The sum of earnings (loss) per share for the quarters may
not equal the total earnings (loss) per share for the year due to
changes in the weighted-average number of common shares
outstanding.
Williams Partners
(UNAUDITED)
2016 2017 (Dollars in millions)
1st Qtr 2nd Qtr 3rd Qtr
4th Qtr Year 1st Qtr 2nd
Qtr 3rd Qtr Year
Revenues:
Service revenues $ 1,226 $ 1,210 $
1,252 $ 1,485 $ 5,173 $ 1,256 $ 1,277 $ 1,304 $ 3,837 Product sales
428 530 655
705 2,318 727
642 581
1,950 Total revenues 1,654 1,740
1,907 2,190 7,491 1,983 1,919 1,885 5,787 Segment costs and
expenses: Product costs 317 403 463 545 1,728 579 537 504 1,620
Operating and maintenance expenses 374 379 377 386 1,516 353 376
387 1,116 Selling, general, and administrative expenses 181 139 147
163 630 156 154 140 450 Gain on sale of Geismar Interest — — — — —
— — (1,095 ) (1,095 ) Impairment of certain assets 6 396 1 54 457 1
2 1,142 1,145 Other segment costs and expenses 10
10 43 (13 )
50 (44 ) (11 )
9 (46 ) Total
segment costs and expenses 888 1,327 1,031 1,135 4,381 1,045 1,058
1,087 3,190 Proportional Modified EBITDA of equity-method
investments 189 191
194 180 754
194 215
202 611
Modified
EBITDA 955 604 1,070 1,235
3,864 1,132 1,076 1,000 3,208
Adjustments 105 461
119 (122 ) 563
(15 ) 28
101 114
Adjusted EBITDA
$ 1,060 $
1,065 $ 1,189
$ 1,113 $ 4,427
$ 1,117 $ 1,104
$ 1,101
$ 3,322 Statistics for Operated Assets
Interstate Transmission Throughput (Tbtu) 1,132.8 983.9 1,040.0
1,073.1 4,229.8 1,158.1 1,053.0 1,094.9 3,306.0 Avg. daily
transportation volumes (Tbtu) 12.5 10.8 11.3 11.7 11.6 12.8 11.6
11.9 12.1 Avg. daily firm reserved capacity (Tbtu) 15.0 14.5 14.6
14.7 14.7 15.8 16.2 17.1 16.4 Gathering and Processing
Gathering volumes (Bcf per day) - Consolidated (1) 8.24 8.13 8.39
8.21 8.25 7.86 7.98 8.20 8.02 Gathering volumes (Bcf per day) -
Non-consolidated (2) 3.74 3.69 3.67 3.80 3.73 4.10 4.12 3.87 4.03
Plant inlet natural gas volumes (Bcf per day) - Consolidated (1)
3.46 3.40 3.66 3.47 3.50 2.92 2.98 3.08 2.99 Plant inlet natural
gas volumes (Bcf per day) - Non-consolidated (2) 0.56 0.54 0.60
0.60 0.57 0.54 0.53 0.39 0.49 Consolidated (1) Ethane margin
($/gallon) $ .08 $ .02 $ .06 $ — $ .04 $ .03 $ .01 $ .03 $ .02
Non-ethane margin ($/gallon) $ .20 $ .36 $ .25 $ .39 $ .29 $ .45 $
.41 $ .45 $ .44 NGL margin ($/gallon) $ .15 $ .20 $ .18 $ .27 $ .20
$ .33 $ .25 $ .29 $ .29 Ethane equity sales (Mbbls/d) 22 26
23 15 22 11 17 17 15 Non-ethane equity sales (Mbbls/d) 35
29 40
34 34 29
26 25
27 NGL equity sales (Mbbls/d) 57 55 63 49 56
40 43 42 42 Ethane production (Mbbls/d) 49 61 56 48 54 40 53
49 47 Non-ethane production (Mbbls/d) 103
100 120 107
108 90 93
99 94
NGL production (Mbbls/d) 152 161 176 155 162 130 146 148 141
Non-consolidated (2) NGL equity sales (Mbbls/d) 5 5 5 5 5 5
4 5 5 NGL production (Mbbls/d) 17 19 21 21 20 21 22 22 22
Petrochemical Services Geismar ethylene sales volumes (million lbs)
423 391 419 405 1,638 266 300 — 566 Geismar ethylene margin ($/lb)
(3) $ .13 $ .15 $ .21 $ .15 $ .16 $ .19 $ .13 $ — $ .16 Canadian
propylene sales volumes (million lbs) 33 8 46 — 87 — — — — Canadian
alky feedstock sales volumes (million gallons) 7 2 6 — 15 — — — —
Overland Pipeline Company (2) NGL transportation volumes
(Mbbls) 16,814 18,410 18,535 18,078 71,837 18,338 20,558 21,015
59,911 (1) Excludes volumes associated with equity-method
investments that are not consolidated for financial reporting
purposes. (2) Includes 100% of the volumes associated with operated
equity-method investments. (3) Ethylene margin and ethylene margin
per pound are calculated using financial results determined in
accordance with GAAP, which include realized ethylene sales prices
and ethylene COGS. Realized sales and COGS per unit metrics may
vary from publicly quoted market indices or spot prices due to
various factors, including, but not limited to, basis
differentials, transportation costs, contract provisions, and
inventory accounting methods.
Capital Expenditures
and Investments
(UNAUDITED)
2016 2017 (Dollars in millions)
1st Qtr 2nd Qtr 3rd Qtr
4th Qtr Year 1st Qtr 2nd
Qtr 3rd Qtr Year
Capital
expenditures:
Williams Partners
$ 463 $ 518 $ 491 $ 472 $ 1,944 $ 509 $ 540 $ 638 $ 1,687 Other
50 38 17
2 107 2
5 6
13
Total(1) $ 513
$ 556 $
508 $ 474 $
2,051 $ 511 $
545 $ 644
$ 1,700 Purchases of
investments: Williams Partners $ 63 $ 59 $ 10 $ 45 $ 177 $ 52 $
27 $ 24 $ 103 Other — —
— — —
— —
— —
Total $
63 $ 59
$ 10 $ 45
$ 177 $ 52
$ 27 $ 24
$ 103 Summary:
Williams Partners $ 526 $ 577 $ 501 $ 517 $ 2,121 $ 561 $ 567 $ 662
$ 1,790 Other 50 38
17 2 107
2 5
6 13
Total $
576 $ 615
$ 518 $ 519
$ 2,228 $ 563
$ 572 $ 668
$ 1,803 Capital
expenditures incurred and purchases of investments: Increases
to property, plant, and equipment $ 525 $ 495 $ 448 $ 444 $ 1,912 $
569 $ 591 $ 666 $ 1,826 Purchases of investments 63
59 10
45 177 52
27 24
103
Total $ 588
$ 554 $ 458
$ 489 $ 2,089
$ 621 $ 618
$ 690 $
1,929 (1) Increases to property, plant, and
equipment $ 525 $ 495 $ 448 $ 444 $ 1,912 $ 569 $ 591 $ 666 $ 1,826
Changes in related accounts payable and accrued liabilities
(12 ) 61 60
30 139 (58 )
(46 ) (22 ) (126 )
Capital expenditures
$ 513
$ 556 $ 508
$ 474 $ 2,051 $
511 $ 545
$ 644 $
1,700 Depreciation and Amortization
and Other Selected Financial Data
(UNAUDITED)
2016 2017 (Dollars in millions)
1st Qtr 2nd Qtr 3rd Qtr
4th Qtr Year 1st Qtr 2nd
Qtr 3rd Qtr Year
Depreciation
and amortization:
Williams
Partners $ 435 $ 432 $ 426 $ 427 $ 1,720 $ 433 $ 423 $ 424 $ 1,280
Other 10 14
9 10
43 9 10
9 28
Total $
445 $ 446 $ 435 $
437 $ 1,763 $ 442 $
433 $ 433 $ 1,308
Other selected financial data: Cash and cash equivalents $
164 $ 135 $ 77 $ 170 $ 639 $ 1,918 $ 1,172 Total assets $
48,807 $ 48,124 $ 47,288 $ 46,835 $ 47,512 $ 48,770 $ 46,120
Capital structure: Debt Commercial paper $ 135 $ 196 $ 2 $ 93 $ — $
— $ — Current $ 976 $ 786 $ 785 $ 785 $ — $ 1,951 $ 502 Noncurrent
$ 23,701 $ 24,394 $ 23,932 $ 22,624 $ 21,825 $ 21,325 $ 20,567
Stockholders’ equity $ 5,691 $ 4,830 $ 4,860 $ 4,643 $ 8,444 $
8,306 $ 8,109 Debt to debt-plus-stockholders’ equity ratio 81.3 %
84.0 % 83.6 % 83.5 % 72.1 % 73.7 % 72.2 %
Cash
distributions received from interests in: Williams Partners
L.P. General partner $ 15 $ 216 $ 224 $ 78 $ 533 $ — $ — $ — $ —
Limited partner 289 288
289 295
1,161 597
421 422
1,440 $ 304 $ 504 $ 513 $ 373 $ 1,694 $ 597 $ 421 $ 422 $ 1,440
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171101006539/en/
WilliamsMedia Contact:Keith Isbell,
918-573-7308orInvestor Contact:Brett Krieg, 918-573-4614
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