Summary
Williams Companies, Inc. (WMB) reported strong revenue growth for the nine months ended September 30, 2000, up 33% to $8.15 billion compared to $6.14 billion in the prior year, driven primarily by its Energy Services segment. This segment saw substantial increases in petroleum products and natural gas liquids sales, benefiting from higher prices and volumes, as well as growth in gas and electric power services. While overall operating income also saw a significant increase of 67% to $1.06 billion, the Communications segment continued to incur substantial losses, primarily due to ongoing network build-out and associated service provision costs. The company also noted a significant increase in interest expenses, reflecting higher debt levels to support expansion. Williams is exploring a potential separation of its energy and communications businesses, having received a favorable IRS ruling for a tax-free spinoff.
Key Highlights
- 1Revenue increased by 30% to $2.86 billion for the three months ended September 30, 2000, and by 33% to $8.15 billion for the nine months ended September 30, 2000, compared to the prior year periods.
- 2Energy Services segment was the primary growth driver, with revenues up significantly due to higher petroleum product and natural gas liquids prices and volumes, alongside increased gas and electric power services.
- 3Operating income rose by 42% to $316.2 million for the three months and 67% to $1.06 billion for the nine months, driven by strong performance in Energy Services and Gas Pipeline.
- 4The Communications segment continued to report significant losses, with an operating loss of $140.2 million in the quarter and $399.2 million year-to-date, attributed to network build-out and associated service costs.
- 5Interest expense increased substantially, by 56% ($94.8 million) for the quarter and 58.6% ($261.6 million) year-to-date, driven by higher borrowing levels and increased average interest rates to fund expansion.
- 6Williams is evaluating a separation of its energy and communications businesses, with a favorable IRS ruling received for a potential tax-free spinoff, expected by August 2001.
- 7The company's balance sheet shows a significant increase in total assets to $32.2 billion from $25.3 billion, reflecting substantial investments in property, plant, and equipment, as well as energy trading assets.