Williams (NYSE: WMB) today announced its unaudited financial
results for the three and six months ended June 30, 2021.
Results exceed expectations and trend toward higher end of
previously increased 2021 financial guidance
- Net income of $304 million, or $0.25 per diluted share
(EPS)
- Adjusted EPS of $0.27 per diluted share – up 8% from 2Q
2020
- Cash flow from operations (CFFO) of $1.1 billion – down $86
million or 8% from 2Q 2020; however, decline was due to working
capital fluctuations
- Available funds from operations (AFFO) of $919 million – up $47
million or 5% from 2Q 2020
- Adjusted EBITDA of $1.317 billion – up $77 million or 6% from
2Q 2020
- Achieved record quarterly gathering volumes of 13.79 Bcf/d
- Debt-to-Adjusted EBITDA at quarter end: 4.13x
- Dividend coverage ratio is 1.85x (AFFO basis)
Recently executed strategic transactions to drive
optimization, synergies and volume growth across portfolio of
assets
- Finalized upstream JV with GeoSouthern in Haynesville, in
addition to previously announced JV with Crowheart in
Wamsutter
- Closed Sequent Energy Management acquisition
- Signed definitive agreements for Shenandoah deepwater Gulf of
Mexico expansion project
- Signed definitive agreements for Whale deepwater Gulf of Mexico
expansion project following producer customer reaching final
investment decision (FID)
CEO Perspective
Alan Armstrong, president and chief executive officer, made the
following comments:
“Williams once again posted another strong quarter of results
with Adjusted EBITDA up 6 percent, reflecting record quarterly gas
gathering volumes and the successful execution of several critical
Transco expansion projects. Our natural gas focused strategy
continues to deliver, driven by our connections in the best supply
areas and evidenced in another quarter of growth in our gathering
volumes despite flat production nationwide. As we move into the
second half of the year, we are trending to the higher end of our
previously increased 2021 financial guidance and are on track to
bring into full service the Leidy South Transco expansion ahead of
schedule and in time for the winter heating season.
“Our strategy of connecting the best supplies of affordable,
reliable and clean natural gas with growing customer demand
continues to produce sustainable growth for our shareholders. Our
recent acquisition of Sequent is designed to enhance this strategy
and accelerate our natural gas pipeline and storage optimization
activities. In addition, our upstream joint ventures with Crowheart
in the Wamsutter and GeoSouthern in the Haynesville enhance the
value of our midstream infrastructure in those regions, while
setting the stage for future clean energy development."
Armstrong added, “As detailed in our latest sustainability
report published last week, we continue to capture near-term
emissions reduction opportunities while driving a variety of other
ESG initiatives focused on building strong communities,
environmental stewardship and workforce diversity. I appreciate our
employees for their commitment to sustainable operations as we meet
today’s growing need for natural gas and leverage our leading
infrastructure for additional low-carbon solutions.”
Williams Summary Financial
Information
2Q
Year to Date
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
2021
2020
GAAP Measures
Net Income (Loss)
$304
$303
$729
($215)
Net Income (Loss) Per Share
$0.25
$0.25
$0.60
($0.18)
Cash Flow From Operations
$1,057
$1,143
$1,972
$1,930
Non-GAAP Measures (1)
Adjusted EBITDA
$1,317
$1,240
$2,732
$2,502
Adjusted Income
$327
$305
$756
$618
Adjusted Income Per Share
$0.27
$0.25
$0.62
$0.51
Available Funds from Operations
$919
$872
$1,948
$1,792
Dividend Coverage Ratio
1.85
x
1.79
x
1.96
x
1.85
x
Other
Debt-to-Adjusted EBITDA at Quarter End
(2)
4.13x
4.31
x
Capital Investments (3)
$460
$363
$737
$647
(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
- Second-quarter 2021 net income was consistent with the prior
year, reflecting $26 million of increased earnings from Northeast
G&P equity-method investments and revenues from recently
acquired upstream operations, as well as the benefit of increased
service revenues from Transco expansion projects and Northeast
G&P, partially offset by a decrease from lower gathering
volumes in the West. These favorable impacts were substantially
offset by $33 million of higher depreciation expense primarily
related to accelerated depreciation on decommissioning assets and
higher operating and maintenance costs.
- Year-to-date 2021 net income improved by $944 million over the
prior year, reflecting $136 million of higher commodity margins,
$54 million of increased earnings from Northeast G&P
equity-method investments, and revenues from recently acquired
upstream operations, partially offset by $42 million of higher
depreciation expense and higher operating and maintenance costs.
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
$347 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 second quarter of 2021
decreased as compared to 2020 primarily due to net working capital
and other changes, partially offset by $15 million higher
distributions from equity-method investments. Year-to-date, cash
flow from operations increased due to higher operating results
exclusive of non-cash charges and $22 million higher distributions
from equity-method investments, partially offset by net working
capital and other changes.
Non-GAAP Measures
- Second-quarter 2021 Adjusted EBITDA increased by $77 million
over the prior year, driven by the previously described benefits
from recently acquired upstream operations and increased service
revenues, as well as $41 million higher proportional EBITDA from
Northeast G&P equity-method investments. These improvements
were partially offset by higher operating and maintenance
costs.
- Year-to-date Adjusted EBITDA increased by $230 million over the
prior year, driven by the previously described benefits from
commodity margins and recently acquired upstream operations, as
well as $74 million higher proportional EBITDA from Northeast
G&P equity-method investments. These improvements were
partially offset by higher operating and maintenance costs.
- Second-quarter 2021 Adjusted Income improved by $22 million
over the prior year, while year-to-date Adjusted Income improved by
$138 million. The year-to-date increase was driven by the
previously described impacts to net income, adjusted to remove the
effects of the absence of $1.2 billion in pre-tax charges in 2020
related to impairments and related noncontrolling interest and
income tax effects. Second-quarter and year-to-date 2021 were also
adjusted to remove the impact of accelerated depreciation on
decommissioning assets.
- Second-quarter 2021 Available Funds From Operations increased
by $47 million, primarily due to higher operating results exclusive
of non-cash charges, $15 million higher distributions from
equity-method investments and lower distributions to noncontrolling
interests. The year-to-date increase of $156 million largely
reflects higher operating results exclusive of non-cash charges and
$22 million higher distributions from equity-method
investments.
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
second-quarter 2021 Form 10-Q.
Second Quarter
Year to Date
Amounts in millions
Modified EBITDA
Adjusted EBITDA
Modified EBITDA
Adjusted EBITDA
2Q 2021
2Q 2020
Change
2Q 2021
2Q 2020
Change
2021
2020
Change
2021
2020
Change
Transmission & Gulf of Mexico
$646
$615
$31
$648
$617
$31
$1,306
$1,277
$29
$1,308
$1,286
$22
Northeast G&P
409
370
39
409
363
46
811
739
72
811
733
78
West
231
253
(22
)
231
252
(21
)
546
468
78
546
468
78
Other
20
8
12
29
8
21
53
15
38
67
15
52
Totals
$1,306
$1,246
$60
$1,317
$1,240
$77
$2,716
$2,499
$217
$2,732
$2,502
$230
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
- Second-quarter 2021 Modified and Adjusted EBITDA improved
compared to the prior year driven by higher natural gas
transmission service revenues related to recent expansion
projects.
- Year-to-date Modified and Adjusted EBITDA also improved
compared to the prior year, as higher service revenues, commodity
margins, and proportional EBITDA from equity-method investments
were partially offset by higher operating and administrative
costs.
Northeast G&P
- Second-quarter and year-to-date 2021 Modified and Adjusted
EBITDA increased over the prior year driven by higher proportional
EBITDA from equity-method investments associated with 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 second-quarter 2021, including 100%
of operated equity-method investments, increased by 9% over the
same period in 2020.
West
- Second-quarter 2021 Modified and Adjusted EBITDA declined
compared to the prior year primarily due to lower service revenues
reflecting lower gathering volumes, lower Barnett deferred revenue
amortization and the absence of a deficiency fee, partially offset
by higher commodity margins driven by higher prices.
- Year-to-date 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, $63
million of higher commodity 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 service revenues reflecting lower Haynesville gathering
revenues from lower rates and volumes, lower Barnett deferred
revenue amortization and the absence of a deficiency fee, as well
as lower proportional EBITDA from equity method investments driven
by reduced transportation volumes on Overland Pass Pipeline.
Other
- Second-quarter and year-to-date 2021 Modified and Adjusted
EBITDA improved compared to the prior year primarily due to our
recently acquired oil and gas producing properties. The
year-to-date increase reflects an estimated $22 million
attributable to the February 2021 severe winter weather.
2021 Financial Guidance
The company expects 2021 Adjusted EBITDA at the higher end of
the previously increased guidance range of $5.2 billion to $5.4
billion and Available Funds from Operations between $3.7 billion
and $3.9 billion. Moreover, the leverage ratio is expected to be
less than the 4.2x midpoint for year-end 2021; growth capex is
reaffirmed at $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' Second-Quarter 2021 Materials to be Posted Shortly;
Q&A Webcast Scheduled for Tomorrow
Williams' second-quarter 2021 earnings presentation will be
posted at www.williams.com. The
company’s second-quarter 2021 earnings conference call and webcast
with analysts and investors is scheduled for Tuesday, Aug. 3, 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/9217437
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 June
30,
Six Months Ended June
30,
2021
2020
2021
2020
(Millions, except per-share
amounts)
Revenues:
Service revenues
$
1,460
$
1,446
$
2,912
$
2,920
Service revenues – commodity
consideration
51
25
100
53
Product sales
772
310
1,883
721
Total revenues
2,283
1,781
4,895
3,694
Costs and expenses:
Product costs
697
271
1,629
667
Processing commodity expenses
18
15
39
28
Operating and maintenance expenses
379
320
739
657
Depreciation and amortization expenses
463
430
901
859
Selling, general, and administrative
expenses
114
127
237
240
Impairment of goodwill
—
—
—
187
Other (income) expense – net
12
6
11
13
Total costs and expenses
1,683
1,169
3,556
2,651
Operating income (loss)
600
612
1,339
1,043
Equity earnings (losses)
135
108
266
130
Impairment of equity-method
investments
—
—
—
(938
)
Other investing income (loss) – net
2
1
4
4
Interest incurred
(301
)
(299
)
(597
)
(600
)
Interest capitalized
3
5
5
10
Other income (expense) – net
2
5
—
9
Income (loss) before income taxes
441
432
1,017
(342
)
Less: Provision (benefit) for income
taxes
119
117
260
(87
)
Net income (loss)
322
315
757
(255
)
Less: Net income (loss) attributable to
noncontrolling interests
18
12
27
(41
)
Net income (loss) attributable to The
Williams Companies, Inc.
304
303
730
(214
)
Less: Preferred stock dividends
—
—
1
1
Net income (loss) available to common
stockholders
$
304
$
303
$
729
$
(215
)
Basic earnings (loss) per common
share:
Net income (loss)
$
.25
$
.25
$
.60
$
(.18
)
Weighted-average shares (thousands)
1,215,250
1,213,601
1,214,950
1,213,310
Diluted earnings (loss) per common
share:
Net income (loss)
$
.25
$
.25
$
.60
$
(.18
)
Weighted-average shares (thousands)
1,217,476
1,214,581
1,217,344
1,213,310
The Williams Companies,
Inc.
Consolidated Balance
Sheet
(Unaudited)
June 30, 2021
December 31,
2020
(Millions, except per-share
amounts)
ASSETS
Current assets:
Cash and cash equivalents
$
1,201
$
142
Trade accounts and other receivables
1,000
1,000
Allowance for doubtful accounts
(1
)
(1
)
Trade accounts and other receivables –
net
999
999
Inventories
194
136
Other current assets and deferred
charges
231
152
Total current assets
2,625
1,429
Investments
5,124
5,159
Property, plant, and equipment
43,543
42,489
Accumulated depreciation and
amortization
(14,244
)
(13,560
)
Property, plant, and equipment – net
29,299
28,929
Intangible assets – net of accumulated
amortization
7,277
7,444
Regulatory assets, deferred charges, and
other
1,182
1,204
Total assets
$
45,507
$
44,165
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
611
$
482
Accrued liabilities
1,005
944
Long-term debt due within one year
2,143
893
Total current liabilities
3,759
2,319
Long-term debt
21,091
21,451
Deferred income tax liabilities
2,179
1,923
Regulatory liabilities, deferred income,
and other
4,213
3,889
Contingent liabilities
Equity:
Stockholders’ equity:
Preferred stock
35
35
Common stock ($1 par value; 1,470 million
shares authorized at June 30, 2021 and December 31, 2020; 1,249
million shares issued at June 30, 2021 and 1,248 million shares
issued at December 31, 2020)
1,249
1,248
Capital in excess of par value
24,401
24,371
Retained deficit
(13,022
)
(12,748
)
Accumulated other comprehensive income
(loss)
(110
)
(96
)
Treasury stock, at cost (35 million shares
of common stock)
(1,041
)
(1,041
)
Total stockholders’ equity
11,512
11,769
Noncontrolling interests in consolidated
subsidiaries
2,753
2,814
Total equity
14,265
14,583
Total liabilities and equity
$
45,507
$
44,165
The Williams Companies,
Inc.
Consolidated Statement of Cash
Flows
(Unaudited)
Six Months Ended June
30,
2021
2020
(Millions)
OPERATING ACTIVITIES:
Net income (loss)
$
757
$
(255
)
Adjustments to reconcile to net cash
provided (used) by operating activities:
Depreciation and amortization
901
859
Provision (benefit) for deferred income
taxes
262
(59
)
Equity (earnings) losses
(266
)
(130
)
Distributions from unconsolidated
affiliates
345
323
Impairment of goodwill
—
187
Impairment of equity-method
investments
—
938
Amortization of stock-based awards
39
24
Cash provided (used) by changes in current
assets and liabilities:
Accounts receivable
(50
)
85
Inventories
(58
)
(9
)
Other current assets and deferred
charges
(56
)
(13
)
Accounts payable
94
236
Accrued liabilities
14
(236
)
Other, including changes in noncurrent
assets and liabilities
(10
)
(20
)
Net cash provided (used) by operating
activities
1,972
1,930
FINANCING ACTIVITIES:
Proceeds from long-term debt
898
3,896
Payments of long-term debt
(11
)
(3,226
)
Proceeds from issuance of common stock
3
6
Common dividends paid
(996
)
(971
)
Dividends and distributions paid to
noncontrolling interests
(95
)
(98
)
Contributions from noncontrolling
interests
6
4
Payments for debt issuance costs
(6
)
(17
)
Other – net
(12
)
(10
)
Net cash provided (used) by financing
activities
(213
)
(416
)
INVESTING ACTIVITIES:
Property, plant, and equipment:
Capital expenditures (1)
(685
)
(613
)
Dispositions – net
(5
)
(16
)
Contributions in aid of construction
36
19
Proceeds from dispositions of
equity-method investments
1
—
Purchases of and contributions to
equity-method investments
(44
)
(66
)
Other – net
(3
)
6
Net cash provided (used) by investing
activities
(700
)
(670
)
Increase (decrease) in cash and cash
equivalents
1,059
844
Cash and cash equivalents at beginning of
year
142
289
Cash and cash equivalents at end of
period
$
1,201
$
1,133
_____________
(1) Increases to property, plant, and
equipment
$
(693
)
$
(581
)
Changes in related accounts payable and
accrued liabilities
8
(32
)
Capital expenditures
$
(685
)
$
(613
)
Transmission & Gulf of
Mexico
(UNAUDITED)
2020
2021
(Dollars in millions)
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Year
1st Qtr
2nd Qtr
Year
Regulated interstate natural gas
transportation, storage, and other revenues (1)
$
692
$
676
$
686
$
702
$
2,756
$
708
$
693
$
1,401
Gathering, processing, and transportation
revenues
99
78
85
86
348
86
90
176
Other fee revenues (1)
4
5
3
6
18
4
4
8
Commodity margins
3
1
4
4
12
8
7
15
Operating and administrative costs (1)
(184
)
(189
)
(192
)
(192
)
(757
)
(198
)
(197
)
(395
)
Other segment income (expenses) - net
4
2
(8
)
8
6
5
5
10
Impairment of certain assets
—
—
—
(170
)
(170
)
—
(2
)
(2
)
Proportional Modified EBITDA of
equity-method investments
44
42
38
42
166
47
46
93
Modified EBITDA
662
615
616
486
2,379
660
646
1,306
Adjustments
7
2
6
158
173
—
2
2
Adjusted EBITDA
$
669
$
617
$
622
$
644
$
2,552
$
660
$
648
$
1,308
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
13.1
13.6
Avg. daily firm reserved capacity
(Tbtu)
17.7
17.5
18.0
18.2
17.9
18.6
18.3
18.5
Northwest Pipeline LLC
Avg. daily transportation volumes
(Tbtu)
2.6
1.9
1.8
2.5
2.2
2.8
2.2
2.5
Avg. daily firm reserved capacity (Tbtu)
(4)
3.9
3.9
3.9
3.8
3.8
3.8
3.8
3.8
Gulfstream - Non-consolidated
Avg. daily transportation volumes
(Tbtu)
1.2
1.2
1.3
1.1
1.2
1.0
1.2
1.1
Avg. daily firm reserved capacity
(Tbtu)
1.3
1.3
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
0.31
0.30
Plant inlet natural gas volumes
(Bcf/d)
0.58
0.50
0.40
0.46
0.48
0.46
0.41
0.44
NGL production (Mbbls/d)
32
25
27
30
29
29
26
28
NGL equity sales (Mbbls/d)
5
4
5
5
5
7
5
6
Crude oil transportation volumes
(Mbbls/d)
138
92
121
132
121
130
151
141
Non-consolidated (3)
Gathering volumes (Bcf/d)
0.35
0.31
0.26
0.30
0.30
0.36
0.40
0.38
Plant inlet natural gas volumes
(Bcf/d)
0.35
0.31
0.25
0.30
0.30
0.37
0.40
0.38
NGL production (Mbbls/d)
24
23
17
21
21
28
31
30
NGL equity sales (Mbbls/d)
5
8
4
6
6
9
7
8
(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.
(4) Revised to include daily maximum peak
capacity.
Northeast G&P
(UNAUDITED)
2020
2021
(Dollars in millions)
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Year
1st Qtr
2nd Qtr
Year
Gathering, processing, transportation, and
fractionation revenues
$
312
$
308
$
332
$
327
$
1,279
$
311
$
315
$
626
Other fee revenues (1)
25
25
22
24
96
25
25
50
Commodity margins
1
1
1
1
4
3
—
3
Operating and administrative costs (1)
(87
)
(86
)
(85
)
(84
)
(342
)
(89
)
(86
)
(175
)
Other segment income (expenses) - net
(2
)
(4
)
(4
)
1
(9
)
(1
)
(7
)
(8
)
Impairment of certain assets
—
—
—
(12
)
(12
)
—
—
—
Proportional Modified EBITDA of
equity-method investments
120
126
121
106
473
153
162
315
Modified EBITDA
369
370
387
363
1,489
402
409
811
Adjustments
1
(7
)
9
43
46
—
—
—
Adjusted EBITDA
$
370
$
363
$
396
$
406
$
1,535
$
402
$
409
$
811
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
4.10
4.15
Plant inlet natural gas volumes
(Bcf/d)
1.23
1.22
1.36
1.45
1.32
1.41
1.62
1.52
NGL production (Mbbls/d) (4)
93
93
114
111
103
102
115
108
NGL equity sales (Mbbls/d)
2
2
2
2
2
1
1
1
Non-consolidated (3)
Gathering volumes (Bcf/d)
4.40
4.68
4.94
5.11
4.78
5.40
5.47
5.44
(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 and Year columns for 2020
volumes reflect revised NGL production.
West
(UNAUDITED)
2020
2021
(Dollars in millions)
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Year
1st Qtr
2nd Qtr
Year
Gathering, processing, transportation,
storage, and fractionation revenues
$
299
$
297
$
288
$
320
$
1,204
$
262
$
278
$
540
Other fee revenues (1)
6
13
16
15
50
6
5
11
Commodity margins
2
30
28
25
85
128
41
169
Operating and administrative costs (1)
(115
)
(111
)
(108
)
(105
)
(439
)
(106
)
(114
)
(220
)
Other segment income (expenses) - net
(5
)
—
(7
)
—
(12
)
—
(1
)
(1
)
Proportional Modified EBITDA of
equity-method investments
28
24
30
28
110
25
22
47
Modified EBITDA
215
253
247
283
998
315
231
546
Adjustments
1
(1
)
(2
)
(6
)
(8
)
—
—
—
Adjusted EBITDA
$
216
$
252
$
245
$
277
$
990
$
315
$
231
$
546
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
3.21
3.16
Plant inlet natural gas volumes
(Bcf/d)
1.26
1.33
1.31
1.13
1.25
1.20
1.20
1.20
NGL production (Mbbls/d)
35
51
71
39
49
36
39
38
NGL equity sales (Mbbls/d)
12
25
34
18
22
13
16
15
Non-consolidated (3)
Gathering volumes (Bcf/d)
0.20
0.24
0.28
0.30
0.25
0.27
0.30
0.29
Plant inlet natural gas volumes
(Bcf/d)
0.20
0.23
0.28
0.29
0.25
0.27
0.30
0.28
NGL production (Mbbls/d)
17
23
26
26
23
24
32
28
NGL and Crude Oil Transportation volumes
(Mbbls/d) (4)
227
142
156
147
168
85
101
93
(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
2nd Qtr
Year
Capital expenditures:
Transmission & Gulf of Mexico
$
185
$
181
$
192
$
190
$
748
$
109
$
209
$
318
Northeast G&P
46
41
32
38
157
40
46
86
West
72
80
93
65
310
33
76
109
Other
3
5
8
8
24
78
94
172
Total (1)
$
306
$
307
$
325
$
301
$
1,239
$
260
$
425
$
685
Purchases of and contributions to
equity-method investments:
Transmission & Gulf of Mexico
$
1
$
1
$
34
$
1
$
37
$
3
$
6
$
9
Northeast G&P
27
30
47
174
278
11
24
35
West
2
5
3
—
10
—
—
—
Total
$
30
$
36
$
84
$
175
$
325
$
14
$
30
$
44
Summary:
Transmission & Gulf of Mexico
$
186
$
182
$
226
$
191
$
785
$
112
$
215
$
327
Northeast G&P
73
71
79
212
435
51
70
121
West
74
85
96
65
320
33
76
109
Other
3
5
8
8
24
78
94
172
Total
$
336
$
343
$
409
$
476
$
1,564
$
274
$
455
$
729
Capital investments:
Increases to property, plant, and
equipment
$
254
$
327
$
331
$
248
$
1,160
$
263
$
430
$
693
Purchases of and contributions to
equity-method investments
30
36
84
175
325
14
30
44
Total
$
284
$
363
$
415
$
423
$
1,485
$
277
$
460
$
737
(1) Increases to property, plant, and
equipment
$
254
$
327
$
331
$
248
$
1,160
$
263
$
430
$
693
Changes in related accounts payable and
accrued liabilities
52
(20
)
(6
)
53
79
(3
)
(5
)
(8
)
Capital expenditures
$
306
$
307
$
325
$
301
$
1,239
$
260
$
425
$
685
Contributions from noncontrolling
interests
$
2
$
2
$
1
$
2
$
7
$
2
$
4
$
6
Contributions in aid of construction
$
14
$
5
$
8
$
10
$
37
$
19
$
17
$
36
Proceeds from disposition of equity-method
investments
$
—
$
—
$
—
$
—
$
—
$
—
$
1
$
1
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 this measure provides 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
2nd Qtr
Year
Income (loss) attributable to The
Williams Companies, Inc. available to common stockholders
$
(518
)
$
303
$
308
$
115
$
208
$
425
$
304
$
729
Income (loss) - diluted earnings (loss)
per common share (1)
$
(.43
)
$
.25
$
.25
$
.09
$
.17
$
.35
$
.25
$
.60
Adjustments:
Transmission &
Gulf of Mexico
Northeast Supply Enhancement project
development costs
$
—
$
3
$
3
$
—
$
6
$
—
$
—
$
—
Impairment of certain assets
—
—
—
170
170
—
2
2
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
—
2
2
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
—
—
—
Commodity derivative non-cash
mark-to-market
—
—
—
—
—
—
4
4
Reversal of costs capitalized in prior
periods
—
—
3
—
3
—
—
—
Pension plan settlement charge
—
—
—
1
1
—
—
—
Accrual for loss contingencies
—
—
—
24
24
5
5
10
Total Other adjustments
—
—
11
32
43
5
9
14
Adjustments included in Modified
EBITDA
9
(6
)
24
227
254
5
11
16
Adjustments below
Modified EBITDA
Accelerated depreciation for
decommissioning assets
—
—
—
—
—
—
20
20
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
—
20
20
Total adjustments
1,147
(6
)
24
335
1,500
5
31
36
Less tax effect for above items
(316
)
8
1
(68
)
(375
)
(1
)
(8
)
(9
)
Adjusted income available to common
stockholders
$
313
$
305
$
333
$
382
$
1,333
$
429
$
327
$
756
Adjusted income - diluted earnings per
common share (1)
$
.26
$
.25
$
.27
$
.31
$
1.10
$
.35
$
.27
$
.62
Weighted-average shares - diluted
(thousands)
1,214,348
1,214,581
1,215,335
1,216,381
1,215,165
1,217,211
1,217,476
1,217,344
(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
2nd Qtr
Year
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
$
1,057
$
1,972
Exclude: Cash (provided) used by changes
in:
Accounts receivable
(67
)
(18
)
103
(16
)
2
59
(9
)
50
Inventories
(19
)
28
24
(22
)
11
8
50
58
Other current assets and deferred
charges
(20
)
33
2
(26
)
(11
)
6
50
56
Accounts payable
155
(391
)
313
(70
)
7
(38
)
(56
)
(94
)
Accrued liabilities
150
86
50
23
309
116
(130
)
(14
)
Other, including changes in noncurrent
assets and liabilities
(23
)
43
(32
)
17
5
16
(6
)
10
Preferred dividends paid
(1
)
—
(1
)
(1
)
(3
)
(1
)
—
(1
)
Dividends and distributions paid to
noncontrolling interests
(44
)
(54
)
(49
)
(38
)
(185
)
(54
)
(41
)
(95
)
Contributions from noncontrolling
interests
2
2
1
2
7
2
4
6
Available funds from operations
$
920
$
872
$
863
$
983
$
3,638
$
1,029
$
919
$
1,948
Common dividends paid
$
485
$
486
$
485
$
485
$
1,941
$
498
$
498
$
996
Coverage ratio:
Available funds from operations divided by
Common dividends paid
1.90
1.79
1.78
2.03
1.87
2.07
1.85
1.96
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
2nd Qtr
Year
Net income (loss)
$
(570
)
$
315
$
323
$
130
$
198
$
435
$
322
$
757
Provision (benefit) for income taxes
(204
)
117
111
55
79
141
119
260
Interest expense
296
294
292
290
1,172
294
298
592
Equity (earnings) losses
(22
)
(108
)
(106
)
(92
)
(328
)
(131
)
(135
)
(266
)
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
)
(2
)
(4
)
Proportional Modified EBITDA of
equity-method investments
192
192
189
176
749
225
230
455
Depreciation and amortization expenses
429
430
426
436
1,721
438
463
901
Accretion expense associated with asset
retirement obligations for nonregulated operations
10
7
10
8
35
10
11
21
Modified EBITDA
$
1,253
$
1,246
$
1,243
$
1,109
$
4,851
$
1,410
$
1,306
$
2,716
Transmission & Gulf of Mexico
$
662
$
615
$
616
$
486
$
2,379
$
660
$
646
$
1,306
Northeast G&P
369
370
387
363
1,489
402
409
811
West
215
253
247
283
998
315
231
546
Other
7
8
(7
)
(23
)
(15
)
33
20
53
Total Modified EBITDA
$
1,253
$
1,246
$
1,243
$
1,109
$
4,851
$
1,410
$
1,306
$
2,716
Adjustments (1):
Transmission & Gulf of Mexico
$
7
$
2
$
6
$
158
$
173
$
—
$
2
$
2
Northeast G&P
1
(7
)
9
43
46
—
—
—
West
1
(1
)
(2
)
(6
)
(8
)
—
—
—
Other
—
—
11
32
43
5
9
14
Total Adjustments
$
9
$
(6
)
$
24
$
227
$
254
$
5
$
11
$
16
Adjusted EBITDA:
Transmission & Gulf of Mexico
$
669
$
617
$
622
$
644
$
2,552
$
660
$
648
$
1,308
Northeast G&P
370
363
396
406
1,535
402
409
811
West
216
252
245
277
990
315
231
546
Other
7
8
4
9
28
38
29
67
Total Adjusted EBITDA
$
1,262
$
1,240
$
1,267
$
1,336
$
5,105
$
1,415
$
1,317
$
2,732
(1) Adjustments by segment are detailed in
the "Reconciliation of Income (Loss) Attributable to The Williams
Companies, Inc. to Non-GAAP 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)
1.85
x
1.90
x
1.95
x
(1) See "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;
- Business strategy;
- 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;
- Demand for our services;
- The impact of the 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;
- Changes in U.S. governmental administration and policies;
- Whether we are able to pay current and expected levels of
dividends;
- 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/20210802005687/en/
MEDIA CONTACT: media@williams.com (800) 945-8723
INVESTOR CONTACT: Danilo Juvane (918) 573-5075
Grace Scott (918) 573-1092
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