Williams (NYSE: WMB) today announced its financial results for
the three months ended March 31, 2018.
First-Quarter 2018 Highlights
- 1Q 2018 Net Income of $152 Million
- 1Q 2018 Adjusted EBITDA of $1.135
Billion
- All Three of Williams Partners' Current
Business Segments Improved Year-Over-Year Adjusted EBITDA
- In 2018, Williams Partners Has Set One-
and Three-Day Delivery Records on Transco and Established Three New
Volume Records on Susquehanna Supply Hub
- Williams Analyst Day Set for May
17
Williams Summary Financial Information
1Q 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. 2018
2017 GAAP Measures Cash Flow from Operations $694
$727 Net income (loss) $152 $373 Net income (loss) per share $0.18
$0.45 Non-GAAP Measures (1) Adjusted income $159 $119
Adjusted income per share $0.19 $0.14 Adjusted EBITDA $1,135 $1,145
Cash Flow available for Dividends and other uses $371 $380 Dividend
Coverage Ratio 1.32x 1.53x (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.
First-Quarter 2018 Financial Results
Williams reported unaudited first-quarter 2018 net income
attributable to Williams of $152 million, a decrease of $221
million from first-quarter 2017. The unfavorable change was driven
primarily by the absence of a $269 million gain in first-quarter
2017 associated with a transaction involving certain joint-venture
interests in the Permian basin and Marcellus shale. Commodity
margins were $59 million lower due primarily to the absence of
margins from the Geismar olefins facility, which was sold July 6,
2017. The unfavorable change also reflects the absence of $43
million of gains on early retirement of debt and contract
settlements and terminations, and $25 million lower equity earnings
due primarily to lower earnings at Discovery Producer Services.
Partially offsetting the decreases were $90 million increased
service revenues due primarily to Williams Partners' Transco
expansions and higher gathered volumes in the Williams Partners'
West business segment and $43 million lower operating and
maintenance (O&M) and selling, general and administrative
(SG&A) expenses. The year-over-year change also includes a
modest increase in income tax expense reflecting the absence of a
$127 million prior-year benefit from the expected utilization of a
capital loss carryover and a reduction in income attributable to
noncontrolling interests.
Williams reported first-quarter 2018 Adjusted EBITDA of $1.135
billion, a $10 million decrease from first-quarter 2017. Williams
Partners' current business segments improved by $53 million over
the same period in 2017, driven by $58 million increased revenues
from Williams Partners' Transco expansion projects being placed
into service in 2017 and 2018 and a $14 million increase in natural
gas liquids margins. Partially offsetting the increases was a $23
million decrease in proportional EBITDA from joint ventures due
primarily to a significant decline in volumes on the Discovery
system. The improvement from Williams Partners' current business
segments was partially offset by the absence of $49 million
Adjusted EBITDA earned in first-quarter 2017 from Williams
Partners' former NGL & Petchem Services business segment
primarily as a result of the sale of the Geismar olefins facility
on July 6, 2017.
CEO Perspective
Alan Armstrong, president and chief executive officer, made the
following comments:
“The organization utilized our stable foundation of advantaged
positions to deliver another impressive quarter of steady growth
driven once again by our consistent fee-based revenue growth as all
three of our current business segments demonstrated year-over-year
improvement in Adjusted EBITDA.
“The demand for low-cost U.S. natural gas continues to increase
as reflected in the year-over-year growth in fee-based revenues
that occurred thanks in large part to our ‘Big 5’ Transco
expansions being placed into service last year. And that demand
continues as we recently filed our application with FERC for our
Southeastern Trail expansion project, another fully-subscribed
Transco expansion.
“I’m extremely pleased with our project execution and
operational performance in 2018. Already this year, we have set
one- and three-day delivery records on Transco, established three
new volume records on our Susquehanna Supply Hub, started
construction on the Gulf Connector’s 475 MMcf/d Gulf Coast LNG
delivery expansion, reached several key milestones on the 1,700
MMcf/d Atlantic Sunrise project, placed Phase 2 of the Garden State
Transco expansion into service, and also placed additional
gathering expansions into service on our Susquehanna Supply Hub in
Pennsylvania and Wamsutter Gathering System in Wyoming.
“No one is as well positioned as Williams to capture the ongoing
demand growth of natural gas in the U.S., and we look forward to
updating investors about our significant achievements and plans for
the future at our Analyst Day event May 17.”
Business Segment Results
Williams’ business segments for financial reporting are Williams
Partners and Other.
Williams
Modified and Adjusted
EBITDA Amounts in millions
1Q 2018
1Q 2017 Modified
EBITDA
Adjust.
AdjustedEBITDA Modified
EBITDA
Adjust. Adjusted
EBITDA
Williams Partners $ 1,107 $ 15 $ 1,122
$ 1,132 ($15 ) $ 1,117 Other 13
— 13 18
10 28 Totals $ 1,120
$ 15 $ 1,135 $ 1,150 ($5 )
$ 1,145 Williams uses Modified EBITDA for its
segment reporting. 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 first-quarter 2018 Modified EBITDA of
$1.107 billion, a decrease of $25 million from first-quarter 2017.
The unfavorable change was driven by lower commodity margins
primarily reflecting the absence of margins from the Geismar
olefins facility, which was sold July 6, 2017, the absence of $43
million of gains on early retirement of debt and contract
settlements and terminations, and $25 million lower proportional
EBITDA from joint ventures due primarily to lower earnings at
Discovery Producer Services. Partially offsetting the decreases
were $58 million of increased revenues from Williams Partners'
Transco expansions and higher gathered volumes in Williams
Partners' West business segment and $31 million lower O&M and
SG&A expenses. Adjusted EBITDA increased by $5 million to
$1.122 billion.
Williams Partners’ complete financial results for first-quarter
2018 are provided in the earnings news release issued today by
Williams Partners.
2018 Guidance
Williams' guidance remains unchanged. Williams Partners'
guidance for Adjusted EBITDA, distributable cash flow, expected
distribution growth, cash distribution coverage ratio, and debt to
EBITDA remains unchanged. Williams Partners continues to identify
attractive new growth capital projects and plans to provide an
update on its capital expenditures guidance for these new projects
at its annual Analyst Day event. These new projects are expected to
contribute to EBITDA for 2019 and beyond.
Williams, Williams Partners Analyst Day Set for May
17
Williams and Williams Partners are scheduled to host their 2018
Analyst Day event May 17, 2018. During the event, Williams'
management will give in-depth presentations covering all of the
company's and partnership's energy infrastructure businesses. This
year's Analyst Day meeting is scheduled to begin at 8:15 a.m.
Eastern Time (7:15 a.m. Central Time) and run approximately four
hours. Presentation slides along with a link to the live webcast
will be accessible at www.williams.com
the morning of May 17. A replay of the 2018 Analyst Day webcast
will also be available on the website for at least 90 days
following the event.
Williams’ First-Quarter 2018 Materials to be Posted Shortly;
Q&A Webcast Scheduled for Tomorrow
Williams’ first-quarter 2018 financial results package will be
posted shortly at www.williams.com.
The materials will include the analyst package.
Williams and Williams Partners will host a joint Q&A live
webcast on Thursday, May 3, 2018, at 9:30 a.m. Eastern Time (8:30
a.m. Central Time). A limited number of phone lines will be
available at (888) 394-8218. International callers should dial
(323) 794-2149. The conference ID is 8527513. 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 first-quarter 2018 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 and accompanying materials 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, economic coverage
ratio, distributable cash flow and cash distribution 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, cash available for
dividends and other uses or distributable cash flow 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;
- 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
(including, but not limited to, the Tax Cuts and Jobs Act of 2017),
regulations (including, but not limited to, the FERC's "Revised
Policy Statement on Treatment of Income Taxes" in Docket No.
PL17-1-000), 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, 2018.
Reconciliation of Income (Loss) Attributable to The
Williams Companies, Inc. to Adjusted Income (UNAUDITED)
2017 2018 (Dollars in millions, except
per-share amounts) 1st Qtr 2nd Qtr
3rd Qtr 4th Qtr Year 1st
Qtr
Income (loss) attributable to The Williams Companies,
Inc. available to common stockholders $ 373
$ 81 $ 33 $ 1,687
$ 2,174 $ 152
Income (loss) -
diluted earnings (loss) per common share $ .45
$ .10 $ .04 $ 2.03
$ 2.62 $ .18
Adjustments:
Williams
Partners
Estimated minimum volume commitments $ 15 $ 15 $ 18 $ (48 ) $ — $ —
Impairment of certain assets — — 1,142 9 1,151 — Ad valorem
obligation timing adjustment — — 7 — 7 — Organizational
realignment-related costs 4 6 6 2 18 — (Gain) loss related to
Canada disposition (3 ) (1 ) 4 4 4 — Severance and related costs 9
4 5 4 22 — Constitution Pipeline project development costs 2 6 4 4
16 2 ACMP Merger and transition costs — 4 3 4 11 — Share of
impairment at equity-method investments — — 1 — 1 — (Gain) loss on
asset retirement — — (5 ) 5 — — Geismar Incident adjustments (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) loss on
early retirement of debt (30 ) — 3 — (27 ) 7 Gain on sale of RGP
Splitter — (12 ) — — (12 ) — Settlement charge from pension early
payout program — — — 35 35 — Regulatory charges resulting from Tax
Reform — — — 713 713 4 Share of regulatory charges resulting from
Tax Reform for equity-method investments — — — 11 11 2 Expenses
associated with Financial Repositioning — 2 — — 2 — Expenses
associated with strategic asset monetizations 1
4 —
— 5 —
Total Williams Partners adjustments (15 ) 28 101 742 856 15
Other
Impairment of certain assets — 23 68 — 91 — Loss related to Canada
disposition 1 — — 1 2 — Expenses associated with strategic
alternatives 1 3 5 — 9 — Settlement charge from pension early
payout program — — — 36 36 — Regulatory charges resulting from Tax
Reform — — — 63 63 — Expenses associated with Financial
Repositioning 8 —
— —
8 — Total Other adjustments 10
26 73
100 209
— Adjustments included in Modified EBITDA (5 )
54 174 842 1,065 15
Adjustments below
Modified EBITDA
Gain on disposition of equity-method investment - Williams Partners
(269 ) — — — (269 ) — Accelerated depreciation by equity-method
investments — — — 9 9 — Change in depreciable life associated with
organizational realignment - Williams Partners (7 ) — — — (7 ) —
Allocation of adjustments to noncontrolling interests 77
(10 ) (28 )
(199 ) (160 ) (5 ) (199 )
(10 ) (28 ) (190 ) (427 ) (5 )
Total adjustments (204 ) 44
146 652 638 10 Less tax effect for above items 77 (17 ) (55 ) (246
) (241 ) (3 ) Adjustments for tax-related items (1) (127 ) — —
(1,923 ) (2,050 ) —
Adjusted
income available to common stockholders $ 119
$ 108 $ 124 $ 170
$ 521 $ 159
Adjusted diluted
earnings per common share (2) $ .14
$ .13 $ .15 $ .20
$ .63 $ .19
Weighted-average shares
- diluted (thousands) 826,476 828,575 829,368 829,607 828,518
830,197 (1) The first quarter of 2017 includes an
unfavorable adjustment related to the release of a valuation
allowance. The fourth quarter of 2017 includes an unfavorable
adjustment to reverse the tax benefit associated with remeasuring
our deferred tax balances at a lower corporate rate resulting from
Tax Reform. (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)
2017 2018 (Dollars in millions)
1st Qtr 2nd Qtr
3rd Qtr 4th Qtr Year 1st Qtr
Net
income (loss) $ 569 $ 193 $ 125
$ 1,622 $ 2,509 $ 270 Provision
(benefit) for income taxes 37 65 24 (2,100 ) (1,974 ) 55 Interest
expense 280 271 267 265 1,083 273 Equity (earnings) losses (107 )
(125 ) (115 ) (87 ) (434 ) (82 ) Other investing (income) loss -
net (272 ) (2 ) (4 ) (4 ) (282 ) (4 ) Proportional Modified EBITDA
of equity-method investments 194 215 202 184 795 169 Depreciation
and amortization expenses 442 433 433 428 1,736 431 Accretion
expense associated with asset retirement obligations for
nonregulated operations 7 9
7 10
33 8
Modified
EBITDA $ 1,150 $
1,059 $ 939
$ 318 $
3,466 $ 1,120 Williams
Partners $ 1,132 $ 1,076 $ 1,000 $ 408 $ 3,616 $ 1,107 Other
18 (17 ) (61 )
(90 ) (150 ) 13
Total Modified EBITDA $ 1,150
$ 1,059 $
939 $ 318
$ 3,466 $ 1,120
Adjustments included in Modified EBITDA
(1): Williams Partners $ (15 ) $ 28 $ 101 $
742 $ 856 $ 15 Other 10 26
73 100
209 —
Total
Adjustments included in Modified EBITDA $ (5
) $ 54
$ 174 $ 842
$ 1,065 $ 15
Adjusted EBITDA: Williams Partners $
1,117 $ 1,104 $ 1,101 $ 1,150 $ 4,472 $ 1,122 Other 28
9 12
10 59
13
Total Adjusted EBITDA
$ 1,145 $ 1,113
$ 1,113
$ 1,160 $ 4,531
$ 1,135 (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)
2017 2018 (Dollars in millions, except per share
amounts) 1st Qtr 2nd Qtr
3rd Qtr 4th Qtr Year 1st Qtr
Distributions from WPZ (accrued / “as declared” basis) $ 421
$ 421 $ 421
$ 421 $ 1,684 $ 431 Other
Segment Adjusted EBITDA 28 9 12
10 59 13 Corporate interest (66 )
(65 ) (66 )
(64 ) (261 ) (64 ) Subtotal 383
365 367 367 1,482 380 WMB cash tax rate 0 % 0 % 2 % 2 % 1 % 0 % WMB
cash taxes (excludes cash taxes paid by WPZ) — — (7 ) (9 ) (16 ) —
Other Segment Maintenance Capital (3 )
(5 ) (5 ) (9 )
(22 ) (9 ) WMB cash available for dividends
and other uses (1) $ 380 $ 360 $ 355 $ 349 $ 1,444 $ 371 WMB
dividends paid (248 ) (248 )
(248 ) (248 )
(992 ) (281 ) Excess cash available after dividends $
132 $ 112 $ 107 $ 101 $ 452 $ 90 Dividend per share $ 0.3000
$ 0.3000 $ 0.3000 $ 0.3000 $ 1.2000 $ 0.3400 Coverage ratio
(2) 1.53 1.45 1.43 1.41 1.46 1.32 (1) Effective with the
first quarter of 2018, Williams increased its regular dividend from
$0.30 per share to $0.34 per share. (2) WMB cash available for
dividends and other uses / WMB dividends paid.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180502006273/en/
WilliamsMedia Contact:Keith Isbell,
918-573-7308orInvestor Contact:Brett Krieg, 918-573-4614
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