Williams Reports Strong First-Quarter Results and Record Volumes; Raises 2021 Guidance

: Business Wire; Posted On May 04, 2021

TULSA, Okla.--(BUSINESS WIRE)--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
Amounts in millions	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

Contacts

MEDIA CONTACT:
This email address is being protected from spambots. You need JavaScript enabled to view it.
(800) 945-8723

INVESTOR CONTACT:
Danilo Juvane
(918) 573-5075

Read full story here

Read Article On Business Wire

Author:This email address is being protected from spambots. You need JavaScript enabled to view it.

Business Wire News