10-QPeriod: Q1 FY2011

WILLIAMS COMPANIES, INC. Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 5, 2011For Securities:WMB

Summary

Williams Companies, Inc. (WMB) reported its first quarter 2011 results, highlighting a significant shift in financial performance compared to the prior year. The company swung to a net income of $146 million from a net loss of $193 million in the first quarter of 2010. This improvement was largely driven by the absence of substantial restructuring costs incurred in the prior year, alongside a notable tax benefit from federal settlements and an international revised assessment. Operationally, the company saw mixed results across its segments. Williams Partners reported slightly improved operating income, supported by higher fee revenues, although NGL prices were offset by lower volumes. The Midstream Canada & Olefins segment showed improvement due to higher olefin and NGL margins. However, the Exploration & Production segment experienced lower operating results. A key strategic development is the ongoing reorganization plan to separate the exploration and production business into a new publicly traded entity, WPX Energy, Inc., with an IPO planned and a subsequent spin-off to shareholders. This separation is expected to enhance growth potential and shareholder value.

Financial Highlights

45 data points
Beta

Revenue

$1.87B

Net Income

$321.00M

17.2% Net Margin

EPS (Diluted)

$0.54

Total Assets

$25.08B

Cash & Equivalents

$923.00M

Free Cash Flow

$811.00M

Financial Statements
Beta
Revenue$1.87B
SG&A Expenses$82.00M
Operating Income$439.00M
Net Income$321.00M
EPS (Basic)$0.55
EPS (Diluted)$0.54
Shares Outstanding (Basic)586.98M
Shares Outstanding (Diluted)596.57M

Key Highlights

  • 1Net income swung from a loss of $193 million in Q1 2010 to a gain of $146 million in Q1 2011, largely due to the absence of $606 million in early debt retirement costs from the prior year's restructuring.
  • 2The company recorded a significant $124 million tax benefit in Q1 2011 related to federal settlements and an international revised assessment.
  • 3Williams Partners saw slightly improved operating income due to higher fee revenues, though NGL prices were offset by lower volumes.
  • 4Midstream Canada & Olefins segment operating income improved by $54 million, driven by higher per-unit margins for olefins and NGLs.
  • 5Exploration & Production segment operating results declined, impacting the overall consolidated performance.
  • 6Williams Companies announced its intention to separate its exploration and production business into a new entity, WPX Energy, Inc., with an initial public offering (IPO) planned.
  • 7A 60% increase in the regular quarterly dividend to $0.20 per share was approved for June 2011, reflecting management's confidence and commitment to shareholder returns.

Frequently Asked Questions

The primary driver for the substantial improvement in net income was the absence of significant restructuring costs incurred in the first quarter of 2010. Specifically, the company did not incur $606 million in early debt retirement costs, which were a major factor in the prior year's net loss.

Williams Companies announced a reorganization plan to separate its exploration and production (E&P) business into a new, publicly traded company called WPX Energy, Inc. This separation will occur in two steps: an initial public offering (IPO) of up to 20% of WPX in 2011, followed by a tax-free spin-off of the remaining interest in WPX to Williams shareholders in 2012. The company will then continue as a premier natural gas infrastructure company.

The performance varied by segment. Williams Partners experienced slightly improved operating income driven by higher fee revenues, despite lower volumes. The Midstream Canada & Olefins segment saw a $54 million improvement in operating income due to better margins. However, the Exploration & Production segment reported lower operating results, negatively impacting the overall consolidated performance.

For 2011, the company anticipates capital expenditures between $3.275 billion and $3.975 billion. Additionally, the Board of Directors approved a significant increase in the regular quarterly dividend, raising it by 60% to $0.20 per share payable in June 2011.