10-QPeriod: Q1 FY2009

WILLIAMS COMPANIES, INC. Quarterly Report for Q1 Ended Mar 31, 2009

Filed April 30, 2009For Securities:WMB

Summary

Williams Companies, Inc. (WMB) reported a significant net loss for the first quarter of 2009, driven by substantial impairments and charges, particularly related to its Venezuela operations. Revenues declined by 34% year-over-year to $2.1 billion, while the company posted a net loss attributable to The Williams Companies, Inc. of $172 million, or $0.30 per diluted share. This contrasts sharply with a profit in the same period last year. The company highlighted significant impairment charges of $246 million after-tax related to its Venezuela operations, including a full reserve for accounts receivable from PDVSA and cessation of revenue recognition. Additionally, Exploration & Production segment revenues were impacted by lower realized commodity prices, while Midstream faced reduced NGL margins due to volatile commodity prices. Despite these challenges, the company maintained a strong liquidity position with $1.8 billion in cash and cash equivalents and access to credit facilities, and is focused on sustaining current operations and managing costs in the prevailing economic recession.

Financial Highlights

22 data points
Beta

Revenue

$1.92B

Net Income

-$172.00M

-8.9% Net Margin

EPS (Diluted)

$-0.29

Cash & Equivalents

$1.79B

Free Cash Flow

$512.00M

Financial Statements
Beta
Revenue$1.92B
SG&A Expenses$125.00M
Operating Income$280.00M
Net Income-$172.00M
EPS (Basic)$-0.30
EPS (Diluted)$-0.29
Shares Outstanding (Basic)579.50M
Shares Outstanding (Diluted)582.36M

Key Highlights

  • 1Reported a net loss of $172 million for Q1 2009, a significant deterioration from a profit in Q1 2008, primarily due to $246 million in after-tax impairments and charges related to Venezuela operations.
  • 2Total revenues decreased by 34% to $2.1 billion, reflecting lower commodity prices and reduced marketing revenues across several segments.
  • 3Exploration & Production segment saw a 36% decline in net realized average prices, though production volumes increased by 20%.
  • 4Midstream segment experienced a significant drop in NGL margins, from 64 cents per gallon in Q1 2008 to 20 cents per gallon in Q1 2009, impacted by volatile commodity prices.
  • 5The company maintained a strong liquidity position with $1.8 billion in cash and cash equivalents and $4.3 billion in available credit capacity.
  • 6Issued $600 million in senior unsecured notes due 2020 in March 2009 to bolster its financial position.

Frequently Asked Questions

The primary driver of the significant loss was a $246 million after-tax charge related to impairments and other charges associated with the company's Venezuela operations. This included fully reserving accounts receivable from PDVSA and ceasing revenue recognition for those operations due to collection uncertainties.

Commodity price fluctuations have had a negative impact. The Exploration & Production segment saw lower realized average prices for natural gas, while the Midstream segment experienced significantly lower NGL margins due to price volatility and the historical relationship between NGL and natural gas prices weakening. The company uses hedging strategies to mitigate some of this risk.

The company maintains a strong liquidity position, with $1.8 billion in cash and cash equivalents and over $4.3 billion in available credit capacity as of March 31, 2009. Management expects to maintain at least $1 billion in liquidity from cash and unused credit facilities throughout 2009 and expects to fund operations and capital expenditures through operating cash flow, existing cash, and credit facilities.

Yes, the company faces several risks. These include the ongoing global economic recession and its impact on energy commodity prices and demand, potential counterparty credit and performance risk, availability of capital, and risks associated with resolving regulatory and litigation issues. Specifically, the situation in Venezuela remains a significant concern.