01—Abstract
Summary
Summary of the 10-K filed February 21, 2019. Cited figures are marked; the original filing is the authoritative source.
Williams Companies, Inc. (WMB) reported its 2018 fiscal year results, marked by significant strategic movements, including the completion of its merger with Williams Partners L.P.
(WPZ). This integration is expected to streamline operations and enhance financial flexibility. The company's business is structured into three primary segments: Northeast G&P, Atlantic-Gulf, and West, each contributing to its core business of connecting North American hydrocarbon resources to markets.
Financially, 2018 presented a mixed picture. While revenue saw an increase primarily driven by higher transportation fees from expansion projects, net income attributable to the company experienced a substantial decline compared to the prior year. This decrease was largely due to significant asset impairments, particularly in the Barnett Shale region, and a higher provision for income taxes in the absence of the prior year's tax reform benefits.
Despite these challenges, Williams remains focused on growth through ongoing expansion projects and disciplined capital deployment. The company declared a quarterly dividend of $0.38a per share, signaling continued commitment to shareholder returns.
02—Key points
Key Highlights
- Completed the merger with Williams Partners L.P. (WPZ) on August 10, 2018, to simplify corporate structure and governance.
- Realigned business operations into three reportable segments: Northeast G&P, Atlantic-Gulf, and West.
- Recorded a significant impairment charge of $1.849 billion related to certain assets in the Barnett Shale region.
- Generated higher service revenues, driven by expansion projects on the Transco pipeline system and increased gathering volumes.
- Announced a regular quarterly dividend of $0.38 per share, payable in March 2019.
- Anticipates 2019 growth capital expenditures to be in the range of $2.7 billion to $2.9 billion, focusing on Transco expansions and gathering/processing infrastructure.
- Navigated regulatory changes related to FERC's income tax policy and the Tax Cuts and Jobs Act.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 21, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $8.60B$8.03B | +7.1% |
| SG&A Expenses | $569.00M$594.00M | −4.2% |
| Operating Expenses | $7.92B$7.10B | +11.5% |
| Operating Income | $768.00M$927.00M | −17.2% |
| Interest Expense | $1.11B$1.08B | +2.7% |
| Net Income | -$155.00M$2.17B | −107.1% |
| EPS (Basic) | $-0.16$2.63 | −106.1% |
| EPS (Diluted) | $-0.16$2.62 | −106.1% |
| Shares Outstanding (Basic) | 973.63M826.18M | +17.8% |
| Shares Outstanding (Diluted) | 973.63M828.52M | +17.5% |
05—Questions
Frequently Asked Questions
What was the most significant financial event for Williams in 2018?
The most significant financial event was the completion of the merger with Williams Partners L.P. (WPZ) on August 10, 2018. This transaction aimed to streamline the corporate structure and enhance financial flexibility.
How did the WPZ merger impact the company's financial statements?
The merger was accounted for as a non-cash equity transaction, leading to increases in common stock and capital in excess of par value, and decreases in accumulated other comprehensive income and noncontrolling interests. It also simplified the company's segment reporting structure.
What led to the substantial decrease in net income attributable to The Williams Companies, Inc. in 2018?
The decrease was primarily driven by a significant impairment charge of $1.849 billion on certain assets in the Barnett Shale region, coupled with a higher provision for income taxes in 2018 compared to 2017, which benefited from tax reform adjustments. These factors were partially offset by gains from asset sales and the absence of regulatory charges from the prior year.
What is the company's outlook for growth and capital expenditures in 2019?
Williams expects its operating results to increase through organic growth, particularly from expansion projects in the Northeast region and on Transco. Growth capital and investment expenditures for 2019 are projected to be between $2.7 billion and $2.9 billion, focusing on Transco expansions and developing gathering and processing infrastructure.
06—Continue