10-QPeriod: Q1 FY2015

WILLIAMS COMPANIES, INC. Quarterly Report for Q1 Ended Mar 31, 2015

Filed April 30, 2015For Securities:WMB

Summary

Williams Companies, Inc. (WMB) reported a decrease in net income attributable to the company to $70 million for the first quarter of 2015, down from $140 million in the prior year period. This decline was primarily driven by the absence of significant insurance recoveries related to the Geismar Incident in Q1 2014 ($125 million) and lower NGL margins due to a substantial drop in commodity prices. Total revenues remained relatively stable year-over-year, slightly decreasing to $1,716 million from $1,749 million, reflecting a decrease in product sales offset by an increase in service revenues, largely due to the consolidation of Access Midstream Partners (ACMP) following the merger completed in February 2015. The company's strategic merger with ACMP significantly reshaped its operations, with the combined entity, Williams Partners L.P. (WPZ), now a more dominant player. Despite the lower reported net income, the company emphasized its strong positioning in North American energy infrastructure, with robust growth prospects driven by abundant natural gas supply. Significant capital investments are planned for 2015, reflecting continued expansion and development of its pipeline and midstream assets.

Financial Highlights

50 data points
Beta

Revenue

$1.72B

Net Income

$70.00M

4.1% Net Margin

EPS (Diluted)

$0.09

Total Assets

$50.46B

Cash & Equivalents

$341.00M

Free Cash Flow

-$163.00M

Financial Statements
Beta
Revenue$1.72B
SG&A Expenses$196.00M
Operating Expenses$1.49B
Operating Income$227.00M
Interest Expense$251.00M
Net Income$70.00M
EPS (Basic)$0.09
EPS (Diluted)$0.09
Shares Outstanding (Basic)748.08M
Shares Outstanding (Diluted)752.03M

Key Highlights

  • 1Net income attributable to The Williams Companies, Inc. decreased to $70 million ($0.09 per share) in Q1 2015 from $140 million ($0.20 per share) in Q1 2014.
  • 2Total revenues were largely flat, decreasing slightly to $1.716 billion in Q1 2015 from $1.749 billion in Q1 2014.
  • 3The significant decline in net income was primarily due to the absence of $125 million in Geismar Incident insurance recoveries recorded in Q1 2014.
  • 4NGL margins were down significantly due to lower commodity prices, impacting profitability.
  • 5The merger with Access Midstream Partners (ACMP) was completed in February 2015, significantly expanding the scale of Williams Partners L.P. (WPZ).
  • 6Dividends declared per common share increased to $0.58 in Q1 2015 from $0.4025 in Q1 2014, reflecting confidence in future performance.
  • 7Operating cash flow increased to $669 million from $446 million in the prior year period, indicating strong operational cash generation.

Frequently Asked Questions

The decrease in net income was primarily driven by the absence of significant insurance recoveries related to the Geismar Incident, which amounted to $125 million in the first quarter of 2014. Additionally, lower NGL margins, resulting from a substantial drop in commodity prices, also contributed to the decline.

The merger with ACMP was completed on February 2, 2015, and its results are now consolidated within Williams Partners L.P. (WPZ). While the merger expanded the company's scale and asset base, the financial statements for Q1 2015 reflect increased expenses and operational integration costs related to the transaction. The 'Williams Partners' segment shows increased service revenues due to the consolidation.

Williams Companies anticipates that crude oil, NGLs, and olefins prices will remain at lower levels throughout 2015 compared to 2014, adversely affecting operating results and cash flows. However, the company highlighted that a significant portion of its business is fee-based, which helps mitigate the impact of commodity price fluctuations. They also expect lower natural gas prices to potentially reduce producer drilling activity and gathering volumes.

Williams Companies plans significant capital investments for 2015, totaling between $3.96 billion and $4.59 billion. Key expansion projects include the Atlantic Sunrise pipeline, Constitution Pipeline, Leidy Southeast expansion, and various midstream gathering infrastructure projects across multiple shale regions. The company is also focused on expanding its Canadian NGL and olefin infrastructure.