Williams (NYSE: WMB) today announced its unaudited financial
results for the three months ended March 31, 2021.
Results exceed expectations across all key metrics
- Net income of $425 million, or $0.35 per diluted share
(EPS)
- Adjusted EPS of $0.35 per diluted share – up 35% from 1Q
2020
- Cash flow from operations (CFFO) of $915 million – up $128
million or 16% from 1Q 2020
- Available funds from operations (AFFO) of $1.029 billion – up
$109 million or 12% from 1Q 2020
- Adjusted EBITDA of $1.415 billion – up $153 million or 12% from
1Q 2020; up 6% excluding favorable winter storm effects
- Record gathering volumes of 13.6 Bcf/d; record contracted
transmission capacity of 22.8 Bcf/d
- Debt-to-Adjusted EBITDA at quarter end: 4.2x
- Guidance midpoints for Adjusted EBITDA and AFFO increase by
$100 million
- Dividend coverage ratio is 2.07x (AFFO basis)
CEO Perspective
Alan Armstrong, president and chief executive officer, made the
following comments:
“Our natural gas business strategy continues to deliver
consistently strong cash flow with first-quarter Adjusted EBITDA up
12 percent from last year, driven in part by record gathering
volumes particularly in the Northeast. Severe winter weather in
February boosted marketing margins and upstream sales from
unusually high prices, but even excluding these weather effects,
our Adjusted EBITDA was up 6 percent, underscoring the stability of
our earnings regardless of external factors.”
“We continued our pace of execution in the first quarter,
placing Southeastern Trail into full service in early January and
progressing on Transco’s Leidy South project to bring additional
gas from Appalachia to growing demand centers along the Atlantic
Seaboard by next winter. We also filed our FERC application for the
Regional Energy Access pipeline expansion, a low-impact project
being designed in a manner that is adaptable to future renewable
energy sources like clean hydrogen and RNG blending.”
Armstrong added, “As one of the nation’s largest clean energy
infrastructure providers, we have a huge opportunity to leverage
our natural gas-focused business as the world moves to a low-carbon
future, while helping customers and the United States meet climate
goals. We believe clean, affordable and reliable natural gas is an
important component of today’s fuel mix and should be prioritized
as one of the most important tools to aggressively displace more
carbon-intensive fuels around the world.”
Williams Summary Financial
Information
1Q
Amounts in millions, except ratios and
per-share amounts. Per share amounts are reported on a diluted
basis. Net income amounts are from continuing operations
attributable to The Williams Companies, Inc. available to common
stockholders.
2021
2020
GAAP Measures
Net Income (Loss)
$425
($518)
Net Income (Loss) Per Share
$0.35
($0.43)
Cash Flow From Operations
$915
$787
Non-GAAP Measures (1)
Adjusted EBITDA
$1,415
$1,262
Adjusted Income
$429
$313
Adjusted Income Per Share
$0.35
$0.26
Available Funds from Operations
$1,029
$920
Dividend Coverage Ratio
2.07
x
1.90
x
Other
Debt-to-Adjusted EBITDA at Quarter End
(2)
4.2
x
4.36
x
Capital Investments (3)
$277
$284
(1) Schedules reconciling Adjusted Income,
Adjusted EBITDA, Available Funds from Operations and Dividend
Coverage Ratio (non-GAAP measures) to the most comparable GAAP
measure are available at www.williams.com and as an attachment to
this news release.
(2) Does not represent leverage ratios
measured for WMB credit agreement compliance or leverage ratios as
calculated by the major credit ratings agencies. Debt is net of
cash on hand, and Adjusted EBITDA reflects the sum of the last four
quarters.
(3) Capital Investments includes increases
to property, plant, and equipment, purchases of businesses, net of
cash acquired, and purchases of and contributions to equity-method
investments.
GAAP Measures
- First-quarter 2021 net income improved by $943 million over the
prior year, reflecting $128 million of higher commodity margins in
2021 and $21 million from recently acquired upstream operations,
while lower Haynesville gathering revenues were substantially
offset by increased earnings from Northeast G&P equity-method
investments. The improvement over last year also reflects the
absence of $1.2 billion in pre-tax charges in 2020 related to
impairments of equity-method investments, goodwill and goodwill at
an equity investee, of which $65 million was attributable to
noncontrolling interests. The provision for income taxes changed
unfavorably by $345 million primarily due to higher pre-tax
income.
- The severe winter weather impact in February 2021 and the
associated effect on commodity prices is estimated to have had a
net favorable impact on our pre-tax results of approximately $77
million, primarily within our commodity margins and results from
upstream operations.
- Cash flow from operations for the first quarter of 2021
increased as compared to 2020 primarily due to the previously
described commodity margin improvement in 2021.
Non-GAAP Measures
- Adjusted EBITDA increased by $153 million over the prior year,
driven by the previously described benefits from commodity margins
and recently acquired upstream operations, while lower Haynesville
gathering revenues were substantially offset by increased
contributions from Northeast G&P equity-method investments.
Even excluding the net favorable impact of the severe winter
weather impact in February 2021, Adjusted EBITDA was higher than
the prior year.
- Adjusted Income improved by $116 million over the prior year
driven by similar changes.
- Available Funds From Operations increased by $109 million,
largely reflecting the previously described improved commodity
margins in 2021.
Business Segment Results & Form 10-Q
Williams' operations are comprised of the following reportable
segments: Transmission & Gulf of Mexico, Northeast G&P,
West and Other. For more information, see the company's
first-quarter 2021 Form 10-Q.
First Quarter
Amounts in millions
Modified EBITDA
Adjusted EBITDA
1Q 2021
1Q 2020
Change
1Q 2021
1Q 2020
Change
Transmission & Gulf of Mexico
$660
$662
($2)
$660
$669
($9)
Northeast G&P
402
369
33
402
370
32
West
315
215
100
315
216
99
Other
33
7
26
38
7
31
Totals
$1,410
$1,253
$157
$1,415
$1,262
$153
Note: 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.
Transmission & Gulf of Mexico
- First-quarter 2021 Modified and Adjusted EBITDA decreased
slightly compared to the prior year, as small increases in service
revenues, commodity margins, and investee EBITDA were offset by
higher operating and administrative costs. An increase in natural
gas transmission service revenues related to recent expansion
projects was partially offset by lower gathering volumes in the
Gulf of Mexico.
Northeast G&P
- First-quarter 2021 Modified and Adjusted EBITDA increased over
the prior year driven by higher gathering volumes on our Bradford
and Marcellus South systems, along with the benefit of an increased
ownership in Blue Racer Midstream, acquired in November 2020.
- Gross gathering volumes for first-quarter 2021, including 100%
of operated equity-method investments, increased by 11% over the
same period in 2020.
West
- First-quarter 2021 Modified and Adjusted EBITDA increased over
the prior year primarily due to an estimated $55 million net
favorable impact from the February 2021 severe winter weather, $50
million of higher commodity marketing margins driven by higher
prices and the absence of prior year inventory impacts, and lower
operating and administrative costs. These favorable changes were
partially offset by lower Haynesville gathering revenues from lower
rates and volumes, as well as lower investee EBITDA driven by
reduced transportation volumes on Overland Pass Pipeline.
Other
- First-quarter 2021 Modified and Adjusted EBITDA includes $30
million from our recently acquired oil and gas producing
properties. Of this amount, we estimate that approximately $22
million is attributable to the February 2021 severe winter
weather.
2021 Financial Guidance
The company now expects 2021 Adjusted EBITDA between $5.2
billion and $5.4 billion and Available Funds from Operations
between $3.7 billion and $3.9 billion, both a $100 million midpoint
increase from guidance originally issued in February 2021. As well,
the leverage ratio midpoint has been updated to ~4.2x versus ~4.25x
prior for year-end 2021. The company is keeping intact 2021 growth
capex guidance between $1 billion to $1.2 billion. Importantly,
Williams expects to generate positive free cash flow (after capital
expenditures and dividends), allowing it to retain financial
flexibility.
Williams' First-Quarter 2021 Materials to be Posted Shortly;
Q&A Webcast Scheduled for Tomorrow
Williams' first-quarter 2021 earnings presentation will be
posted at www.williams.com. The company’s first-quarter 2021
earnings conference call and webcast with analysts and investors is
scheduled for Tuesday, May 4, at 9:30 a.m. Eastern Time (8:30 a.m.
Central Time). Participants who wish to join the call by phone must
register using the following link:
http://www.directeventreg.com/registration/event/5942459
A webcast link to the conference call is available at
www.williams.com. A replay of the webcast will be available on the
website for at least 90 days following the event.
About Williams
Williams (NYSE: WMB) is committed to being the leader in
providing infrastructure that safely delivers natural gas products
to reliably fuel the clean energy economy. Headquartered in Tulsa,
Oklahoma, Williams is an industry-leading, investment grade C-Corp
with operations across the natural gas value chain including
gathering, processing, interstate transportation and storage of
natural gas and natural gas liquids. With major positions in top
U.S. supply basins, Williams connects the best supplies with the
growing demand for clean energy. Williams owns and operates more
than 30,000 miles of pipelines system wide – including Transco, the
nation’s largest volume and fastest growing pipeline – and handles
approximately 30 percent of the natural gas in the United States
that is used every day for clean-power generation, heating and
industrial use. www.williams.com
The Williams Companies,
Inc.
Consolidated Statement of
Operations
(Unaudited)
Three Months Ended
March 31,
2021
2020
(Millions, except per-share
amounts)
Revenues:
Service revenues
$
1,452
$
1,474
Service revenues – commodity
consideration
49
28
Product sales
1,111
411
Total revenues
2,612
1,913
Costs and expenses:
Product costs
932
396
Processing commodity expenses
21
13
Operating and maintenance expenses
360
337
Depreciation and amortization expenses
438
429
Selling, general, and administrative
expenses
123
113
Impairment of goodwill
—
187
Other (income) expense – net
(1
)
7
Total costs and expenses
1,873
1,482
Operating income (loss)
739
431
Equity earnings (losses)
131
22
Impairment of equity-method
investments
—
(938
)
Other investing income (loss) – net
2
3
Interest incurred
(296
)
(301
)
Interest capitalized
2
5
Other income (expense) – net
(2
)
4
Income (loss) before income taxes
576
(774
)
Less: Provision (benefit) for income
taxes
141
(204
)
Net income (loss)
435
(570
)
Less: Net income (loss) attributable to
noncontrolling interests
9
(53
)
Net income (loss) attributable to The
Williams Companies, Inc.
426
(517
)
Less: Preferred stock dividends
1
1
Net income (loss) available to common
stockholders
$
425
$
(518
)
Basic earnings (loss) per common
share:
Net income (loss)
$
.35
$
(.43
)
Weighted-average shares (thousands)
1,214,646
1,213,019
Diluted earnings (loss) per common
share:
Net income (loss)
$
.35
$
(.43
)
Weighted-average shares (thousands)
1,217,211
1,213,019
The Williams Companies,
Inc.
Consolidated Balance
Sheet
(Unaudited)
March 31, 2021
December 31,
2020
(Millions, except per-share
amounts)
ASSETS
Current assets:
Cash and cash equivalents
$
1,126
$
142
Trade accounts and other receivables
1,059
1,000
Allowance for doubtful accounts
(1
)
(1
)
Trade accounts and other receivables –
net
1,058
999
Inventories
144
136
Other current assets and deferred
charges
169
152
Total current assets
2,497
1,429
Investments
5,129
5,159
Property, plant, and equipment
42,970
42,489
Accumulated depreciation and
amortization
(13,894
)
(13,560
)
Property, plant, and equipment – net
29,076
28,929
Intangible assets – net of accumulated
amortization
7,362
7,444
Regulatory assets, deferred charges, and
other
1,198
1,204
Total assets
$
45,262
$
44,165
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
538
$
482
Accrued liabilities
855
944
Long-term debt due within one year
2,142
893
Total current liabilities
3,535
2,319
Long-term debt
21,092
21,451
Deferred income tax liabilities
2,065
1,923
Regulatory liabilities, deferred income,
and other
4,097
3,889
Contingent liabilities
Equity:
Stockholders’ equity:
Preferred stock
35
35
Common stock ($1 par value; 1,470 million
shares authorized at March 31, 2021 and December 31, 2020; 1,249
million shares issued at March 31, 2021 and 1,248 million shares
issued at December 31, 2020)
1,249
1,248
Capital in excess of par value
24,384
24,371
Retained deficit
(12,825
)
(12,748
)
Accumulated other comprehensive income
(loss)
(100
)
(96
)
Treasury stock, at cost (35 million shares
of common stock)
(1,041
)
(1,041
)
Total stockholders’ equity
11,702
11,769
Noncontrolling interests in consolidated
subsidiaries
2,771
2,814
Total equity
14,473
14,583
Total liabilities and equity
$
45,262
$
44,165
The Williams Companies,
Inc.
Consolidated Statement of Cash
Flows
(Unaudited)
Three Months Ended
March 31,
2021
2020
(Millions)
OPERATING ACTIVITIES:
Net income (loss)
$
435
$
(570
)
Adjustments to reconcile to net cash
provided (used) by operating activities:
Depreciation and amortization
438
429
Provision (benefit) for deferred income
taxes
144
(177
)
Equity (earnings) losses
(131
)
(22
)
Distributions from unconsolidated
affiliates
176
169
Impairment of goodwill
—
187
Impairment of equity-method
investments
—
938
Amortization of stock-based awards
20
9
Cash provided (used) by changes in current
assets and liabilities:
Accounts receivable
(59
)
67
Inventories
(8
)
19
Other current assets and deferred
charges
(6
)
20
Accounts payable
38
(155
)
Accrued liabilities
(116
)
(150
)
Other, including changes in noncurrent
assets and liabilities
(16
)
23
Net cash provided (used) by operating
activities
915
787
FINANCING ACTIVITIES:
Proceeds from long-term debt
897
1,702
Payments of long-term debt
(5
)
(1,518
)
Proceeds from issuance of common stock
3
6
Common dividends paid
(498
)
(485
)
Dividends and distributions paid to
noncontrolling interests
(54
)
(44
)
Contributions from noncontrolling
interests
2
2
Payments for debt issuance costs
(6
)
—
Other – net
(13
)
(10
)
Net cash provided (used) by financing
activities
326
(347
)
INVESTING ACTIVITIES:
Property, plant, and equipment:
Capital expenditures (1)
(260
)
(306
)
Dispositions – net
(1
)
(3
)
Contributions in aid of construction
19
14
Purchases of and contributions to
equity-method investments
(14
)
(30
)
Other – net
(1
)
(4
)
Net cash provided (used) by investing
activities
(257
)
(329
)
Increase (decrease) in cash and cash
equivalents
984
111
Cash and cash equivalents at beginning of
year
142
289
Cash and cash equivalents at end of
period
$
1,126
$
400
_____________
(1) Increases to property, plant, and
equipment
$
(263
)
$
(254
)
Changes in related accounts payable and
accrued liabilities
3
(52
)
Capital expenditures
$
(260
)
$
(306
)
Transmission & Gulf of
Mexico
(UNAUDITED)
2020
2021
(Dollars in millions)
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Year
1st Qtr
Regulated interstate natural gas
transportation, storage, and other revenues (1)
$
692
$
676
$
686
$
702
$
2,756
$
708
Gathering, processing, and transportation
revenues
99
78
85
86
348
86
Other fee revenues (1)
4
5
3
6
18
4
Commodity margins
3
1
4
4
12
8
Operating and administrative costs (1)
(184
)
(189
)
(192
)
(192
)
(757
)
(198
)
Other segment income (expenses) - net
4
2
(8
)
8
6
5
Impairment of certain assets
—
—
—
(170
)
(170
)
—
Proportional Modified EBITDA of
equity-method investments
44
42
38
42
166
47
Modified EBITDA
662
615
616
486
2,379
660
Adjustments
7
2
6
158
173
—
Adjusted EBITDA
$
669
$
617
$
622
$
644
$
2,552
$
660
Statistics for Operated Assets
Natural Gas Transmission
Transcontinental Gas Pipe Line
Avg. daily transportation volumes
(Tbtu)
13.8
12.0
12.8
13.2
12.9
14.1
Avg. daily firm reserved capacity
(Tbtu)
17.7
17.5
18.0
18.2
17.9
18.6
Northwest Pipeline LLC
Avg. daily transportation volumes
(Tbtu)
2.6
1.9
1.8
2.5
2.2
2.8
Avg. daily firm reserved capacity
(Tbtu)
3.0
3.0
3.0
2.9
3.0
2.9
Gulfstream - Non-consolidated
Avg. daily transportation volumes
(Tbtu)
1.2
1.2
1.3
1.1
1.2
1.0
Avg. daily firm reserved capacity
(Tbtu)
1.3
1.3
1.3
1.3
1.3
1.3
Gathering, Processing, and Crude Oil
Transportation
Consolidated (2)
Gathering volumes (Bcf/d)
0.30
0.23
0.23
0.26
0.25
0.28
Plant inlet natural gas volumes
(Bcf/d)
0.58
0.50
0.40
0.46
0.48
0.46
NGL production (Mbbls/d)
32
25
27
30
29
29
NGL equity sales (Mbbls/d)
5
4
5
5
5
7
Crude oil transportation volumes
(Mbbls/d)
138
92
121
132
121
130
Non-consolidated (3)
Gathering volumes (Bcf/d)
0.35
0.31
0.26
0.30
0.30
0.36
Plant inlet natural gas volumes
(Bcf/d)
0.35
0.31
0.25
0.30
0.30
0.37
NGL production (Mbbls/d)
24
23
17
21
21
28
NGL equity sales (Mbbls/d)
5
8
4
6
6
9
(1) Excludes certain amounts associated
with revenues and operating costs for tracked or reimbursable
charges.
(2) Excludes volumes associated with
equity-method investments that are not consolidated in our
results.
(3) Includes 100% of the volumes
associated with operated equity-method investments.
Northeast G&P
(UNAUDITED)
2020
2021
(Dollars in millions)
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Year
1st Qtr
Gathering, processing, transportation, and
fractionation revenues
$
312
$
308
$
332
$
327
$
1,279
$
311
Other fee revenues (1)
25
25
22
24
96
25
Commodity margins
1
1
1
1
4
3
Operating and administrative costs (1)
(87
)
(86
)
(85
)
(84
)
(342
)
(89
)
Other segment income (expenses) - net
(2
)
(4
)
(4
)
1
(9
)
(1
)
Impairment of certain assets
—
—
—
(12
)
(12
)
—
Proportional Modified EBITDA of
equity-method investments
120
126
121
106
473
153
Modified EBITDA
369
370
387
363
1,489
402
Adjustments
1
(7
)
9
43
46
—
Adjusted EBITDA
$
370
$
363
$
396
$
406
$
1,535
$
402
Statistics for Operated Assets
Gathering and Processing
Consolidated (2)
Gathering volumes (Bcf/d)
4.27
4.14
4.47
4.36
4.31
4.19
Plant inlet natural gas volumes
(Bcf/d)
1.23
1.22
1.36
1.45
1.32
1.41
NGL production (Mbbls/d) (4)
107
93
114
111
106
102
NGL equity sales (Mbbls/d)
2
2
2
2
2
1
Non-consolidated (3)
Gathering volumes (Bcf/d)
4.40
4.68
4.94
5.11
4.78
5.40
(1) Excludes certain amounts associated
with revenues and operating costs for reimbursable charges.
(2) Includes volumes associated with
Susquehanna Supply Hub, the Northeast JV, and Utica Supply Hub, all
of which are consolidated.
(3) Includes 100% of the volumes
associated with operated equity-method investments, including the
Laurel Mountain Midstream partnership; and the Bradford Supply Hub
and a portion of the Marcellus South Supply Hub within the
Appalachia Midstream Services partnership.
(4) 1st Qtr, 2nd Qtr, and Year columns for
2020 volumes have been updated to reflect current meter parameters
used to measure NGL production.
West
(UNAUDITED)
2020
2021
(Dollars in millions)
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Year
1st Qtr
Gathering, processing, transportation,
storage, and fractionation revenues
$
299
$
297
$
288
$
320
$
1,204
$
262
Other fee revenues (1)
6
13
16
15
50
6
Commodity margins
2
30
28
25
85
128
Operating and administrative costs (1)
(115
)
(111
)
(108
)
(105
)
(439
)
(106
)
Other segment income (expenses) - net
(5
)
—
(7
)
—
(12
)
—
Proportional Modified EBITDA of
equity-method investments
28
24
30
28
110
25
Modified EBITDA
215
253
247
283
998
315
Adjustments
1
(1
)
(2
)
(6
)
(8
)
—
Adjusted EBITDA
$
216
$
252
$
245
$
277
$
990
$
315
Statistics for Operated Assets
Gathering and Processing
Consolidated (2)
Gathering volumes (Bcf/d)
3.43
3.40
3.28
3.19
3.33
3.11
Plant inlet natural gas volumes
(Bcf/d)
1.26
1.33
1.31
1.13
1.25
1.20
NGL production (Mbbls/d)
35
51
71
39
49
36
NGL equity sales (Mbbls/d)
12
25
34
18
22
13
Non-consolidated (3)
Gathering volumes (Bcf/d)
0.20
0.24
0.28
0.30
0.25
0.27
Plant inlet natural gas volumes
(Bcf/d)
0.20
0.23
0.28
0.29
0.25
0.27
NGL production (Mbbls/d)
17
23
26
26
23
24
NGL and Crude Oil Transportation volumes
(Mbbls/d) (4)
227
142
156
147
168
85
(1) Excludes certain amounts associated
with revenues and operating costs for reimbursable charges.
(2) Excludes volumes associated with
equity-method investments that are not consolidated in our
results.
(3) Includes 100% of the volumes
associated with operated equity-method investments, including Rocky
Mountain Midstream.
(4) Includes 100% of the volumes
associated with operated equity-method investments, including the
Overland Pass Pipeline Company and Rocky Mountain Midstream.
Capital Expenditures and
Investments
(UNAUDITED)
2020
2021
(Dollars in millions)
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Year
1st Qtr
Capital expenditures:
Transmission & Gulf of Mexico
$
185
$
181
$
192
$
190
$
748
$
109
Northeast G&P
46
41
32
38
157
40
West
72
80
93
65
310
33
Other
3
5
8
8
24
78
Total (1)
$
306
$
307
$
325
$
301
$
1,239
$
260
Purchases of and contributions to
equity-method investments:
Transmission & Gulf of Mexico
$
1
$
1
$
34
$
1
$
37
$
3
Northeast G&P
27
30
47
174
278
11
West
2
5
3
—
10
—
Total
$
30
$
36
$
84
$
175
$
325
$
14
Summary:
Transmission & Gulf of Mexico
$
186
$
182
$
226
$
191
$
785
$
112
Northeast G&P
73
71
79
212
435
51
West
74
85
96
65
320
33
Other
3
5
8
8
24
78
Total
$
336
$
343
$
409
$
476
$
1,564
$
274
Capital investments:
Increases to property, plant, and
equipment
$
254
$
327
$
331
$
248
$
1,160
$
263
Purchases of investments
30
36
84
175
325
14
Total
$
284
$
363
$
415
$
423
$
1,485
$
277
(1) Increases to property, plant, and
equipment
$
254
$
327
$
331
$
248
$
1,160
$
263
Changes in related accounts payable and
accrued liabilities
52
(20
)
(6
)
53
79
(3
)
Capital expenditures
$
306
$
307
$
325
$
301
$
1,239
$
260
Contributions from noncontrolling
interests
$
2
$
2
$
1
$
2
$
7
$
2
Contributions in aid of construction
$
14
$
5
$
8
$
10
$
37
$
19
Non-GAAP Measures
This news release and accompanying materials may include certain
financial measures – Adjusted EBITDA, adjusted income (“earnings”),
adjusted earnings per share, available funds from operations and
dividend 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. Such
items are excluded from net income to determine adjusted income.
Management believes these measure provide investors meaningful
insight into results from ongoing operations.
Available funds from operations is defined as cash flow from
operations excluding the effect of changes in working capital and
certain other changes in noncurrent assets and liabilities, reduced
by preferred dividends and net distributions to noncontrolling
interests.
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 assets and the cash that the business is
generating.
Neither Adjusted EBITDA, adjusted income, nor available funds
from operations 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.
Reconciliation of Income (Loss)
Attributable to The Williams Companies, Inc. to Non-GAAP Adjusted
Income
(UNAUDITED)
2020
2021
(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
$
(518
)
$
303
$
308
$
115
$
208
$
425
Income (loss) - diluted earnings (loss)
per common share (1)
$
(.43
)
$
.25
$
.25
$
.09
$
.17
$
.35
Adjustments:
Transmission & Gulf of Mexico
Northeast Supply Enhancement project
development costs
$
—
$
3
$
3
$
—
$
6
$
—
Impairment of certain assets
—
—
—
170
170
—
Pension plan settlement charge
4
1
—
—
5
—
Adjustment of Transco’s regulatory asset
for post-WPZ Merger state deferred income tax change consistent
with filed rate case
2
—
—
—
2
—
Benefit of change in employee benefit
policy
—
(3
)
(6
)
(13
)
(22
)
—
Reversal of costs capitalized in prior
periods
—
—
10
1
11
—
Severance and related costs
1
1
(1
)
—
1
—
Total Transmission & Gulf of Mexico
adjustments
7
2
6
158
173
—
Northeast G&P
Share of early debt retirement gain at
equity-method investment
—
(5
)
—
—
(5
)
—
Share of impairment of certain assets at
equity-method investments
—
—
11
36
47
—
Pension plan settlement charge
1
—
—
—
1
—
Impairment of certain assets
—
—
—
12
12
—
Benefit of change in employee benefit
policy
—
(2
)
(2
)
(5
)
(9
)
—
Total Northeast G&P adjustments
1
(7
)
9
43
46
—
West
Pension plan settlement charge
1
—
—
—
1
—
Benefit of change in employee benefit
policy
—
(1
)
(2
)
(6
)
(9
)
—
Total West adjustments
1
(1
)
(2
)
(6
)
(8
)
—
Other
Regulatory asset reversals from impaired
projects
—
—
8
7
15
—
Reversal of costs capitalized in prior
periods
—
—
3
—
3
—
Pension settlement charge
—
—
—
1
1
—
Accrual for loss contingencies
—
—
—
24
24
5
Total Other adjustments
—
—
11
32
43
5
Adjustments included in Modified
EBITDA
9
(6
)
24
227
254
5
Adjustments below Modified EBITDA
Impairment of equity-method
investments
938
—
—
108
1,046
—
Impairment of goodwill (2)
187
—
—
—
187
—
Share of impairment of goodwill at
equity-method investment
78
—
—
—
78
—
Allocation of adjustments to
noncontrolling interests
(65
)
—
—
—
(65
)
—
1,138
—
—
108
1,246
—
Total adjustments
1,147
(6
)
24
335
1,500
5
Less tax effect for above items
(316
)
8
1
(68
)
(375
)
(1
)
Adjusted income available to common
stockholders
$
313
$
305
$
333
$
382
$
1,333
$
429
Adjusted income - diluted earnings per
common share (1)
$
.26
$
.25
$
.27
$
.31
$
1.10
$
.35
Weighted-average shares - diluted
(thousands)
1,214,348
1,214,581
1,215,335
1,216,381
1,215,165
1,217,211
(1) 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.
(2) Our partner's $65 million share of the
first-quarter 2020 impairment of goodwill is reflected below in
Allocation of adjustments to noncontrolling interests.
Reconciliation of Cash Flow from
Operating Activities to Available Funds from Operations
(AFFO)
(UNAUDITED)
2020
2021
(Dollars in millions, except coverage
ratios)
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Year
1st Qtr
The Williams Companies, Inc.
Reconciliation of GAAP "Net cash provided
(used) by operating activities" to Non-GAAP "Available funds from
operations"
Net cash provided (used) by operating
activities
$
787
$
1,143
$
452
$
1,114
$
3,496
$
915
Exclude: Cash (provided) used by changes
in:
Accounts receivable
(67
)
(18
)
103
(16
)
2
59
Inventories
(19
)
28
24
(22
)
11
8
Other current assets and deferred
charges
(20
)
33
2
(26
)
(11
)
6
Accounts payable
155
(391
)
313
(70
)
7
(38
)
Accrued liabilities
150
86
50
23
309
116
Other, including changes in noncurrent
assets and liabilities
(23
)
43
(32
)
17
5
16
Preferred dividends paid
(1
)
—
(1
)
(1
)
(3
)
(1
)
Dividends and distributions paid to
noncontrolling interests
(44
)
(54
)
(49
)
(38
)
(185
)
(54
)
Contributions from noncontrolling
interests
2
2
1
2
7
2
Available funds from operations
$
920
$
872
$
863
$
983
$
3,638
$
1,029
Common dividends paid
$
485
$
486
$
485
$
485
$
1,941
$
498
Coverage ratio:
Available funds from operations divided by
Common dividends paid
1.90
1.79
1.78
2.03
1.87
2.07
Reconciliation of "Net Income (Loss)"
to “Modified EBITDA” and Non-GAAP “Adjusted EBITDA”
(UNAUDITED)
2020
2021
(Dollars in millions)
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Year
1st Qtr
Net income (loss)
$
(570
)
$
315
$
323
$
130
$
198
$
435
Provision (benefit) for income taxes
(204
)
117
111
55
79
141
Interest expense
296
294
292
290
1,172
294
Equity (earnings) losses
(22
)
(108
)
(106
)
(92
)
(328
)
(131
)
Impairment of goodwill
187
—
—
—
187
—
Impairment of equity-method
investments
938
—
—
108
1,046
—
Other investing (income) loss - net
(3
)
(1
)
(2
)
(2
)
(8
)
(2
)
Proportional Modified EBITDA of
equity-method investments
192
192
189
176
749
225
Depreciation and amortization expenses
429
430
426
436
1,721
438
Accretion expense associated with asset
retirement obligations for nonregulated operations
10
7
10
8
35
10
Modified EBITDA
$
1,253
$
1,246
$
1,243
$
1,109
$
4,851
$
1,410
Transmission & Gulf of Mexico
$
662
$
615
$
616
$
486
$
2,379
$
660
Northeast G&P
369
370
387
363
1,489
402
West
215
253
247
283
998
315
Other
7
8
(7
)
(23
)
(15
)
33
Total Modified EBITDA
$
1,253
$
1,246
$
1,243
$
1,109
$
4,851
$
1,410
Adjustments included in Modified EBITDA
(1):
Transmission & Gulf of Mexico
$
7
$
2
$
6
$
158
$
173
$
—
Northeast G&P
1
(7
)
9
43
46
—
West
1
(1
)
(2
)
(6
)
(8
)
—
Other
—
—
11
32
43
5
Total Adjustments included in Modified
EBITDA
$
9
$
(6
)
$
24
$
227
$
254
$
5
Adjusted EBITDA:
Transmission & Gulf of Mexico
$
669
$
617
$
622
$
644
$
2,552
$
660
Northeast G&P
370
363
396
406
1,535
402
West
216
252
245
277
990
315
Other
7
8
4
9
28
38
Total Adjusted EBITDA
$
1,262
$
1,240
$
1,267
$
1,336
$
5,105
$
1,415
(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.
Reconciliation of Net Income (Loss) to
Modified EBITDA, Non-GAAP Adjusted EBITDA and Cash Flow from
Operating Activities to Non-GAAP Available Funds from Operations
(AFFO)
2021 Guidance
(Dollars in millions, except per share
amounts and coverage ratio)
Low
Mid
High
Net income (loss)
$
1,385
$
1,485
$
1,585
Provision (benefit) for income taxes
490
Interest expense
1,175
Equity (earnings) losses
(475
)
Proportional Modified EBITDA of
equity-method investments
835
Depreciation and amortization expenses and
accretion for asset retirement obligations associated with
nonregulated operations
1,795
Other
(10
)
Modified EBITDA
$
5,195
$
5,295
$
5,395
EBITDA Adjustments
5
Adjusted EBITDA
$
5,200
$
5,300
$
5,400
Net income (loss)
$
1,385
$
1,485
$
1,585
Less: Net income (loss) attributable to
noncontrolling interests & preferred dividends
64
Net income (loss) attributable to The
Williams Companies, Inc. available to common stockholders
$
1,321
$
1,421
$
1,521
Adjustments:
Adjustments included in Modified EBITDA
(1)
5
Adjustments below Modified EBITDA (1)
—
Allocation of adjustments to
noncontrolling interests (1)
—
Total adjustments
5
Less tax effect for above items (1)
(1
)
Adjusted income available to common
stockholders
$
1,325
$
1,425
$
1,525
Adjusted diluted earnings per common
share
$
1.09
$
1.17
$
1.25
Weighted-average shares - diluted
(millions)
1,217
Available Funds from Operations
(AFFO):
Net cash provided by operating activities
(net of changes in working capital and changes in other, including
changes in noncurrent assets and liabilities)
$
3,890
$
3,990
$
4,090
Preferred dividends paid
(3
)
Dividends and distributions paid to
noncontrolling interests
(200
)
Contributions from noncontrolling
interests
13
Available funds from operations
(AFFO)
$
3,700
$
3,800
$
3,900
AFFO per common share
$
3.04
$
3.12
$
3.20
Common dividends paid
$
2,000
Coverage Ratio (AFFO/Common dividends
paid)
1.85x
1.90x
1.95x
(1) See 1Q Reconciliation of income (loss)
attributable to The Williams Companies, Inc. to Non-GAAP Adjusted
Income
for additional details.
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 in this report 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:
- Levels of dividends to Williams stockholders;
- Future credit ratings of Williams and its 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;
- Cash flow from operations or results of operations;
- Seasonality of certain business components;
- Natural gas, natural gas liquids and crude oil prices, supply,
and demand;
- The impact of the novel coronavirus (COVID-19) pandemic.
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 in this
report. 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:
- Availability of supplies, market demand, and volatility of
prices;
- Development and rate of adoption of alternative energy
sources;
- The impact of existing and future laws and regulations, the
regulatory environment, environmental matters, and litigation, as
well as our ability to obtain necessary permits and approvals, and
achieve favorable rate proceeding outcomes;
- Our exposure to the credit risk of our customers and
counterparties;
- Our ability to acquire new businesses and assets and
successfully integrate those operations and assets into existing
businesses as well as successfully expand our facilities, and to
consummate asset sales on acceptable terms;
- Whether we are able to successfully identify, evaluate, and
timely execute our capital projects and investment
opportunities;
- The strength and financial resources of our competitors and the
effects of competition;
- The amount of cash distributions from and capital requirements
of our investments and joint ventures in which we participate;
- Whether we will be able to effectively execute our financing
plan;
- Increasing scrutiny and changing expectations from stakeholders
with respect to our environmental, social, and governance
practices;
- The physical and financial risks associated with climate
change;
- The impacts of operational and developmental hazards and
unforeseen interruptions;
- The risks resulting from outbreaks or other public health
crises, including COVID-19;
- Risks associated with weather and natural phenomena, including
climate conditions and physical damage to our facilities;
- Acts of terrorism, cybersecurity incidents, and related
disruptions;
- Our costs and funding obligations for defined benefit pension
plans and other postretirement benefit plans;
- Changes in maintenance and construction costs, as well as our
ability to obtain sufficient construction-related inputs, including
skilled labor;
- 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);
- 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 ability of the members of the Organization of Petroleum
Exporting Countries and other oil exporting nations to agree to and
maintain oil price and production controls and the impact on
domestic production;
- Changes in the current geopolitical situation;
- Whether we are able to pay current and expected levels of
dividends;
- Changes in U.S. governmental administration and policies;
- 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 and referred to below may cause our intentions to
change from those statements of intention set forth in this report.
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 for the
year ended December 31, 2020, as filed with the SEC on February 24,
2021.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210503005716/en/
MEDIA CONTACT: media@williams.com (800) 945-8723
INVESTOR CONTACT: Danilo Juvane (918) 573-5075
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