Williams Continues Track Record of Financial Stability and Growth With Higher Fourth Quarter and Full-Year 2022 Results; Analyst Day Set for Feb. 21

: Business Wire; Posted On Feb 21, 2023

TULSA, Okla.--(BUSINESS WIRE)--Williams (NYSE: WMB) today announced its unaudited financial results for the three and 12 months ended Dec. 31, 2022.

Strong fundamentals drive full-year 2022 financial results

GAAP net income of $2.046 billion, or $1.67 per diluted share (EPS) – up 35% vs. 2021
Adjusted net income of $2.228 billion, or $1.82 per diluted share (Adjusted EPS) – up 34% vs. 2021
Adjusted EBITDA of $6.418 billion – up $783 million or 14% vs. 2021
Cash flow from operations (CFFO) of $4.889 billion – up $944 million or 24% vs. 2021
Available funds from operations (AFFO) of $4.918 billion – up $845 million or 21% vs. 2021
Dividend coverage ratio of 2.37x (AFFO basis)
Record gathering volumes of 16.5 Bcf/d and contracted transmission capacity of 24.4 Bcf/d – up 9% and 3%, respectively, from 2021
Expect 3% growth in 2023 with Adjusted EBITDA guidance midpoint of $6.6 billion, yielding 7% CAGR over the last five years
Ended the year with 3.55x leverage ratio

Strong 4Q results across key financial metrics cap a record year

GAAP net income of $668 million, or $0.55 per diluted share
Adjusted net income of $653 million, or $0.53 per diluted share (Adjusted EPS) – up 37% and 36%, respectively, vs. 4Q 2021
Adjusted EBITDA of $1.774 billion – up $291 million or 20% vs. 4Q 2021
CFFO of $1.219 billion – up 7% vs. 4Q 2021
AFFO of $1.357 billion – up 30% vs. 4Q 2021
Dividend coverage ratio of 2.62x (AFFO basis)

Growth projects, acquisitions and tech investments advance clean energy strategy

Received FERC certificate and key permits for the Regional Energy Access expansion project which will provide the Northeast with greater access to clean, cost-effective natural gas
Completed three strategic acquisitions: NorTex Midstream, Trace Midstream’s Haynesville assets and MountainWest at attractive valuations
Advanced LNG capabilities with wellhead-to-water strategy and full-value chain NextGen Gas program
Secured additional commitments on the Louisiana Energy Gateway project which connects Haynesville production to growing Gulf Coast LNG markets
Continued execution of incremental growth projects on Transco, Northeast G&P, Haynesville and Deepwater Gulf of Mexico
Outpaced midstream industry across key sustainability rankings including the 2022 CDP Climate Change Questionnaire and S&P Global ESG Score
Named for the third consecutive year to the DJSI North American index and for the second consecutive year to the DJSI World index

CEO Perspective

Alan Armstrong, president and chief executive officer, made the following comments:

“Williams finished the year strong with 20% Adjusted EBITDA growth in the fourth quarter, driven by our core business, upstream JVs and commodity marketing segment. Our natural gas-focused strategy once again resulted in record performance in 2022 with contracted transmission capacity, gathering volumes and Adjusted EBITDA all surpassing previous highs. Despite macroeconomic impacts of inflation, higher interest rates and recession risks, Williams delivered outstanding results that exceeded our financial guidance, even after we raised it twice during the year.

“In addition to the outstanding financial results in 2022, we also reached agreements on three acquisitions that bolster our ability to deliver growth through a variety of macroeconomic conditions. We significantly expanded our footprint with the strategic acquisitions of NorTex Midstream and Trace Midstream’s Haynesville assets, a key link in our Gulf Coast wellhead-to-water strategy. And just last week, we closed on our acquisition of MountainWest, enhancing our asset footprint in the western U.S. and growing our fully contracted demand based services. These investments along with our slate of high-return growth opportunities along our existing infrastructure give us a clear path to significant growth for years to come.”

Armstrong added, “Looking ahead, Williams will continue to set the pace for sustainable midstream companies by driving best-in-class emissions performance across the entire value chain. Natural gas is one of the most important tools available to reduce emissions on a global scale, and the build out of electrification and renewables will require our infrastructure and deep expertise in reliable energy delivery, resulting in continued earnings growth for Williams and long-term value creation for our shareholders.”

Williams Summary Financial Information	4Q		Full Year
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.	2022	2021	2022	2021

GAAP Measures
Net Income	$668	$621	$2,046	$1,514
Net Income Per Share	$0.55	$0.51	$1.67	$1.24
Cash Flow From Operations	$1,219	$1,139	$4,889	$3,945

Non-GAAP Measures (1)
Adjusted EBITDA	$1,774	$1,483	$6,418	$5,635
Adjusted Net Income	$653	$476	$2,228	$1,658
Adjusted Earnings Per Share	$0.53	$0.39	$1.82	$1.36
Available Funds from Operations	$1,357	$1,045	$4,918	$4,073
Dividend Coverage Ratio	2.62x	2.10x	2.37x	2.04x

Other
Debt-to-Adjusted EBITDA at Quarter End (2)	3.55x	3.90x
Capital Investments (3) (4) (5)	$876	$371	$2,147	$1,577

(1) Schedules reconciling Adjusted Net 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 (growth & maintenance capital), purchases of businesses, net of cash acquired, purchases of and contributions to equity-method investments and purchases of other long-term investments.
(4) Full-year 2022 excludes $933 million for purchase of the Trace Midstream Haynesville gathering assets, which closed April 29, 2022.
(5) Full-year 2022 excludes $424 million for purchase of the NorTex Midstream assets, which closed August 31, 2022.

GAAP Measures

Fourth-quarter 2022 net income increased by $47 million compared to the prior year reflecting the benefit of higher service revenues driven by increased Haynesville gathering volumes including the Trace Acquisition, as well as higher commodity margins, which included unfavorable write-downs of inventory to lower period-end market prices, and increased results from our upstream operations. These improvements were partially offset by an unfavorable change of $128 million in net unrealized gains/losses on commodity derivatives, higher operating expenses, including higher employee-related costs, and increased intangible asset amortization. The tax provision increased primarily due to higher pretax income.

Full-year 2022 net income increased by $532 million compared to the prior year reflecting the benefit of higher service revenues as described above and also reflecting higher commodity-based rates and Transco’s Leidy South project being in service, higher results from our upstream operations, and higher commodity margins, which include unfavorable write-downs of inventory to lower period-end market prices. These improvements were partially offset by higher operating and administrative expenses driven by the increased scale of our upstream operations and higher employee-related costs, including costs from the Sequent acquisition for the full 2022 period, increased intangible asset amortization, an unfavorable change of $140 million in net unrealized gains and losses on commodity derivatives and the absence of a $77 million favorable impact in 2021 from Winter Storm Uri. The tax provision changed favorably as the impact of higher pretax income was more than offset by $134 million associated with the release of valuation allowances on deferred income tax assets and federal income tax settlements in the second quarter and the net benefit from a lower estimated state deferred income tax rate in the third quarter.

Cash flow from operations for the fourth quarter of 2022 increased as compared to 2021 primarily due to higher operating results exclusive of non-cash items partially offset by unfavorable net changes in working capital. Full-year 2022 cash flow from operations also increased compared to 2021 driven by higher operating results exclusive of non-cash items, favorable changes in margin deposits associated with commodity derivatives, and higher distributions from equity-method investments, partially offset by unfavorable net changes in working capital.

Non-GAAP Measures

Fourth-quarter 2022 Adjusted EBITDA increased by $291 million over the prior year, driven by the previously described benefits from service revenues, commodity margins, and upstream operations, partially offset by higher operating costs. Full-year 2022 Adjusted EBITDA increased by $783 million over the prior year due to similar drivers, but also reflecting higher administrative costs and the absence of the favorable impact in 2021 from Winter Storm Uri.

Fourth-quarter 2022 Adjusted Income improved by $177 million over the prior year, driven by the previously described impacts to net income, adjusted primarily to remove the effects of net unrealized gains/losses on commodity derivatives and amortization of certain assets from the Sequent acquisition. Full-year 2022 Adjusted Income improved by $570 million over the prior year driven by the previously described impacts to net income, adjusted primarily to remove the effects of net unrealized gains/losses on commodity derivatives, amortization of certain assets from the Sequent acquisition, and favorable income tax benefits.

Fourth-quarter 2022 Available Funds From Operations (AFFO) increased by $312 million compared to the prior year primarily due to higher operating results exclusive of non-cash items. Full-year 2022 AFFO increased by $845 million reflecting higher operating results exclusive of non-cash items and higher distributions from equity-method investments.

Business Segment Results & Form 10-K

Williams' operations are comprised of the following reportable segments: Transmission & Gulf of Mexico, Northeast G&P, West and Gas & NGL Marketing Services, as well as Other. For more information, see the company's 2022 Form 10-K.

	Fourth Quarter						Full Year
Amounts in millions	Modified EBITDA			Adjusted EBITDA			Modified EBITDA			Adjusted EBITDA
Amounts in millions	4Q 2022	4Q 2021	Change	4Q 2022	4Q 2021	Change	2022	2021	Change	2022	2021	Change
Transmission & Gulf of Mexico	$687	$685	$2	$700	$685	$15	$2,674	$2,621	$53	$2,720	$2,623	$97
Northeast G&P	464	459	5	464	459	5	1,796	1,712	84	1,796	1,712	84
West	326	259	67	326	259	67	1,211	961	250	1,219	961	258
Gas & NGL Marketing Services	209	183	26	149	11	138	(40)	22	(62)	258	146	112
Other	150	87	63	135	69	66	434	178	256	425	193	232
Total	$1,836	$1,673	$163	$1,774	$1,483	$291	$6,075	$5,494	$581	$6,418	$5,635	$783

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

Fourth-quarter 2022 Modified and Adjusted EBITDA improved compared to the prior year driven by higher service revenues from the NorTex acquisition, partially offset by higher operating and administrative costs. Year-to-date 2022 Modified and Adjusted EBITDA improved compared to the prior year driven by higher service revenues reflecting Transco’s Leidy South project going in service and the NorTex acquisition, as well as the absence of hurricane related impacts, partially offset by higher operating and administrative costs. Modified EBITDA for the 2022 periods was further impacted by certain regulatory, abandonment, and monitoring charges which are excluded from Adjusted EBITDA.

Northeast G&P

Fourth-quarter 2022 Modified and Adjusted EBITDA increased over the prior year driven by higher service revenues from Ohio Valley Midstream, partially offset by lower contributions from equity-investees reflecting lower cost-of-service rates, lower commodity-based rates, lower volumes and impact from winter weather.

Both Modified and Adjusted EBITDA also improved for the full-year 2022 period, driven by Ohio Valley Midstream and gathering rate increases, partially offset by lower Susquehanna volumes, higher operating and administrative costs, lower net equity-investee contributions reflecting lower cost-of-service rates partially offset by higher commodity-based rates, lower volumes and impact from winter weather.

West

Fourth-quarter and full-year 2022 Modified and Adjusted EBITDA increased compared to the prior year benefiting from higher Haynesville gathering volumes including contributions from Trace Midstream acquired in April as well as higher net realized commodity-based rates, partially offset by winter weather impact in the Wamsutter and Rocky Mountain Midstream joint venture as well as higher operating and administrative costs.

Gas & NGL Marketing Services

Fourth-quarter 2022 Modified EBITDA improved from the prior year primarily reflecting higher commodity margins which included higher write-downs of inventory to lower period-end market prices, partially offset by a $122 million net unfavorable change in unrealized gains/losses on commodity derivatives, which is excluded from Adjusted EBITDA.

Full-year 2022 Modified EBITDA declined from the prior year primarily reflecting a $168 million net unfavorable change in unrealized loss on commodity derivatives, which is excluded from Adjusted EBITDA, as well as the absence of a $58 million favorable impact in 2021 from Winter Storm Uri and higher administrative costs associated with the Sequent business acquired in July 2021. These decreases were partially offset by higher commodity margins which included higher write-downs of inventory to lower period-end market prices.

Other

Fourth-quarter 2022 Modified and Adjusted EBITDA improved compared to the prior year primarily reflecting higher volumes from our upstream operations in the Haynesville Shale, partially offset by winter weather impact in the Wamsutter.

Full-year 2022 Modified EBITDA also improved compared to the prior year primarily reflecting higher prices and volumes from our upstream operations and a $25 million net favorable change in unrealized gain/loss on commodity derivatives related to our upstream operations, which is excluded from Adjusted EBITDA. Both measures were also impacted by higher operating expenses and the absence of a $22 million favorable impact in 2021 from Winter Storm Uri. The full-year results were partially offset by winter weather impact in the Wamsutter.

2023 Financial Guidance

The company expects 2023 Adjusted EBITDA between $6.4 billion and $6.8 billion. The company also expects 2023 growth capex between $1.4 billion to $1.7 billion and maintenance capex between $750 million and $850 million, which includes capital of $250 million for emissions reduction and modernization initiatives. Importantly, Williams anticipates a leverage ratio midpoint of 3.65x, which will allow it to retain financial flexibility. The dividend has been increased by 5.3% on an annualized basis to $1.79 in 2023 from $1.70 in 2022.

Williams 2023 Analyst Day Scheduled for Tomorrow, Materials to be Posted Shortly

Williams is hosting its 2023 Analyst Day event on Tuesday, Feb. 21, 2023 beginning at 8:30 a.m. Eastern Time (7:30 a.m. Central Time). In addition to discussing 2022 results, Williams' management will give in-depth presentations covering the company's natural gas infrastructure strategy to meet growing clean energy demands. These presentations will highlight the company’s efficient operations, disciplined project execution, strong financial position and 2023 financial guidance. Presentation slides and earnings materials will be accessible on the Williams’ Investor Relations website shortly.

Participants who wish to view the live presentation can access the webcast here: https://app.webinar.net/wAoX6Qm6lRx.

A replay of the 2023 Analyst Day webcast will also be available on the website for at least 90 days following the event.

About Williams

As the world demands reliable, low-cost, low-carbon energy, Williams (NYSE: WMB) will be there with the best transport, storage and delivery solutions 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, storage, wholesale marketing and trading 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 32,000 miles of pipelines system wide – including Transco, the nation’s largest volume and fastest growing pipeline – and handles approximately one third of the natural gas in the United States that is used every day for clean-power generation, heating and industrial use. Learn how the company is leveraging its nationwide footprint to incorporate clean hydrogen, NextGen Gas and other innovations at www.williams.com.

The Williams Companies, Inc. Consolidated Statement of Income

		Year Ended December 31,
		2022			2021			2020
	(Millions, except per-share amounts)
Revenues:
Service revenues		$	6,536		$	6,001		$	5,924
Service revenues – commodity consideration			260			238			129
Product sales			4,556			4,536			1,671
Net gain (loss) on commodity derivatives			(387	)		(148	)		(5	)
Total revenues			10,965			10,627			7,719
Costs and expenses:
Product costs			3,369			3,931			1,545
Net processing commodity expenses			88			101			68
Operating and maintenance expenses			1,817			1,548			1,326
Depreciation and amortization expenses			2,009			1,842			1,721
Selling, general, and administrative expenses			636			558			466
Impairment of certain assets			—			2			182
Impairment of goodwill			—			—			187
Other (income) expense – net			28			14			22
Total costs and expenses			7,947			7,996			5,517
Operating income (loss)			3,018			2,631			2,202
Equity earnings (losses)			637			608			328
Impairment of equity-method investments			—			—			(1,046	)
Other investing income (loss) – net			16			7			8
Interest incurred			(1,167	)		(1,190	)		(1,192	)
Interest capitalized			20			11			20
Other income (expense) – net			18			6			(43	)
Income (loss) before income taxes			2,542			2,073			277
Less: Provision (benefit) for income taxes			425			511			79
Net income (loss)			2,117			1,562			198
Less: Net income (loss) attributable to noncontrolling interests			68			45			(13	)
Net income (loss) attributable to The Williams Companies, Inc.			2,049			1,517			211
Less: Preferred stock dividends			3			3			3
Net income (loss) available to common stockholders		$	2,046		$	1,514		$	208
Basic earnings (loss) per common share:
Net income (loss) available to common stockholders		$	1.68		$	1.25		$	.17
Weighted-average shares (thousands)			1,218,362			1,215,221			1,213,631
Diluted earnings (loss) per common share:
Net income (loss) available to common stockholders		$	1.67		$	1.24		$	.17
Weighted-average shares (thousands)			1,222,672			1,218,215			1,215,165

The Williams Companies, Inc. Consolidated Balance Sheet

	December 31,
	2022			2021
	(Millions, except per-share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	152		$	1,680
Trade accounts and other receivables		2,729			1,986
Allowance for doubtful accounts		(6	)		(8	)
Trade accounts and other receivables – net		2,723			1,978
Inventories		320			379
Derivative assets		323			301
Other current assets and deferred charges		279			211
Total current assets		3,797			4,549

Investments		5,065			5,127
Property, plant, and equipment – net		30,889			29,258
Intangible assets – net of accumulated amortization		7,363			7,402
Regulatory assets, deferred charges, and other		1,319			1,276
Total assets	$	48,433		$	47,612

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	2,327		$	1,746
Derivative liabilities		316			166
Accrued and other current liabilities		1,270			1,035
Commercial paper		350			—
Long-term debt due within one year		627			2,025
Total current liabilities		4,890			4,972

Long-term debt		21,927			21,650
Deferred income tax liabilities		2,887			2,453
Regulatory liabilities, deferred income, and other		4,684			4,436
Contingent liabilities and commitments

Equity:
Stockholders’ equity:
Preferred stock ($1 par value; 30 million shares authorized at December 31, 2022 and December 31, 2021; 35,000 shares issued at December 31, 2022 and December 31, 2021)		35			35
Common stock ($1 par value; 1,470 million shares authorized at December 31, 2022 and December 31, 2021; 1,253 million shares issued at December 31, 2022 and 1,250 million shares issued at December 31, 2021)		1,253			1,250
Capital in excess of par value		24,542			24,449
Retained deficit		(13,271	)		(13,237	)
Accumulated other comprehensive income (loss)		(24	)		(33	)
Treasury stock, at cost (35 million shares of common stock)		(1,050	)		(1,041	)
Total stockholders’ equity		11,485			11,423
Noncontrolling interests in consolidated subsidiaries		2,560			2,678
Total equity		14,045			14,101
Total liabilities and equity	$	48,433		$	47,612

The Williams Companies, Inc. Consolidated Statement of Cash Flows

	Year Ended December 31,
	2022			2021			2020
	(Millions)
OPERATING ACTIVITIES:
Net income (loss)	$	2,117		$	1,562		$	198
Adjustments to reconcile to net cash provided (used) by operating activities:
Depreciation and amortization		2,009			1,842			1,721
Provision (benefit) for deferred income taxes		431			509			108
Equity (earnings) losses		(637	)		(608	)		(328	)
Distributions from equity-method investees		865			757			653
Impairment of goodwill		—			—			187
Impairment of equity-method investments		—			—			1,046
Impairment of certain assets		—			2			182
Net unrealized (gain) loss from derivative instruments		249			109			—
Inventory write-downs		161			15			17
Amortization of stock-based awards		73			81			52
Cash provided (used) by changes in current assets and liabilities:
Accounts receivable		(733	)		(545	)		(2	)
Inventories		(110	)		(139	)		(28	)
Other current assets and deferred charges		(33	)		(63	)		11
Accounts payable		410			643			(7	)
Accrued and other current liabilities		209			58			(309	)
Changes in current and noncurrent derivative assets and liabilities		94			(277	)		(4	)
Other, including changes in noncurrent assets and liabilities		(216	)		(1	)		(1	)
Net cash provided (used) by operating activities		4,889			3,945			3,496
FINANCING ACTIVITIES:
Proceeds from (payments of) commercial paper – net		345			—			—
Proceeds from long-term debt		1,755			2,155			3,899
Payments of long-term debt		(2,876	)		(894	)		(3,841	)
Proceeds from issuance of common stock		54			9			9
Common dividends paid		(2,071	)		(1,992	)		(1,941	)
Dividends and distributions paid to noncontrolling interests		(204	)		(187	)		(185	)
Contributions from noncontrolling interests		18			9			7
Payments for debt issuance costs		(17	)		(26	)		(20	)
Other – net		(46	)		(16	)		(13	)
Net cash provided (used) by financing activities		(3,042	)		(942	)		(2,085	)
INVESTING ACTIVITIES:
Property, plant, and equipment:
Capital expenditures (1)		(2,253	)		(1,239	)		(1,239	)
Dispositions – net		(30	)		(8	)		(36	)
Contributions in aid of construction		12			52			37
Purchases of businesses, net of cash acquired		(933	)		(151	)		—
Purchases of and contributions to equity-method investments		(166	)		(115	)		(325	)
Other – net		(5	)		(4	)		5
Net cash provided (used) by investing activities		(3,375	)		(1,465	)		(1,558	)
Increase (decrease) in cash and cash equivalents		(1,528	)		1,538			(147	)
Cash and cash equivalents at beginning of year		1,680			142			289
Cash and cash equivalents at end of year	$	152		$	1,680		$	142
_________
(1) Increases to property, plant, and equipment	$	(2,394	)	$	(1,305	)	$	(1,160	)
Changes in related accounts payable and accrued liabilities		141			66			(79	)
Capital expenditures	$	(2,253	)	$	(1,239	)	$	(1,239	)

Contacts

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

INVESTOR CONTACTS:
Danilo Juvane
(918) 573-5075

Grace Scott
(918) 573-1092

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