10-QPeriod: Q3 FY2013

WILLIAMS COMPANIES, INC. Quarterly Report for Q3 Ended Sep 30, 2013

Filed October 31, 2013For Securities:WMB

Summary

Williams Companies, Inc. (WMB) reported its third-quarter 2013 financial results, showing a slight decrease in net income attributable to the company to $141 million, or $0.20 per diluted share, compared to $155 million, or $0.25 per diluted share, for the same period in the prior year. This decline was primarily driven by lower product sales revenues, impacted by reduced NGL production volumes and lower olefin production due to the Geismar Incident. Despite the quarterly dip, the company highlighted strong performance in its service revenues, largely due to growth in acquired businesses and expansion projects coming online. The company also reaffirmed its commitment to shareholder returns, announcing a 17.2% increase in its quarterly dividend. Management expects continued growth in dividends and capital investment, with a significant focus on expanding its fee-based business segments. Key ongoing projects include expansions in the Marcellus Shale, deepwater Gulf of Mexico, and the development of the Bluegrass Pipeline, underscoring the company's strategic direction towards connecting North American resource plays to growing markets.

Financial Highlights

52 data points
Beta

Revenue

$1.62B

56.3% Gross Margin

Net Income

$141.00M

8.7% Net Margin

EPS (Diluted)

$0.20

Total Assets

$26.45B

Cash & Equivalents

$732.00M

Free Cash Flow

-$473.00M

Financial Statements
Beta
Revenue$1.62B
Cost of Revenue$710.00M
Gross Profit$913.00M
SG&A Expenses$130.00M
Operating Expenses$1.29B
Operating Income$336.00M
Net Income$141.00M
EPS (Basic)$0.21
EPS (Diluted)$0.20
Shares Outstanding (Basic)683.27M
Shares Outstanding (Diluted)687.31M

Key Highlights

  • 1Net income attributable to WMB decreased to $141 million ($0.20/share) in Q3 2013 from $155 million ($0.25/share) in Q3 2012.
  • 2Total revenues declined to $1.62 billion in Q3 2013 from $1.75 billion in Q3 2012, primarily due to lower product sales.
  • 3Service revenues increased by 9% to $736 million in Q3 2013, driven by growth in acquired businesses and new projects.
  • 4The company declared a quarterly dividend of $0.36625 per share, a 17.2% increase year-over-year.
  • 5Significant capital expenditures are planned for 2013, totaling approximately $4.4 billion, focused on expansion projects.
  • 6The Geismar Incident negatively impacted product sales and incurred costs, though insurance recoveries are expected to mitigate financial losses.
  • 7Williams Partners L.P. (WPZ) initiated a commercial paper program in March 2013, with $371 million outstanding at quarter-end.

Frequently Asked Questions

The primary driver of the decrease in net income attributable to The Williams Companies, Inc. was a decline in product sales revenues. This was largely due to lower olefin production resulting from the Geismar Incident and reduced NGL production volumes, influenced by lower ethane recoveries and a change in a customer contract.

Williams Companies has substantial insurance coverage for repair and replacement costs, lost production, and additional expenses related to the Geismar Incident. While they have expensed certain costs under deductibles, they expect insurance recoveries to significantly mitigate the financial loss and are focused on investigations and the repair and expansion of the plant, which is expected to be operational by April 2014.

The company expects to continue increasing its dividend on a quarterly basis, targeting a 20% annual increase for 2013, 2014, and 2015. Planned consolidated capital expenditures for 2013 are approximately $4.4 billion, primarily funded through cash on hand, operational cash flow, and debt/equity issuances by Williams Partners, focused on expansion projects across various segments.

Williams Companies is focused on connecting North America's hydrocarbon resource plays to growing markets. Their strategy emphasizes expanding fee-based businesses, which are expected to reduce the influence of commodity price fluctuations on operating results and cash flows. Key growth areas include the Marcellus Shale, deepwater Gulf of Mexico, and the development of the Bluegrass Pipeline.