10-QPeriod: Q1 FY2017

WILLIAMS COMPANIES, INC. Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 4, 2017For Securities:WMB

Summary

Williams Companies, Inc. (WMB) reported a significant turnaround in its financial performance for the first quarter of 2017 compared to the same period in 2016. The company moved from a net loss of $65 million attributable to The Williams Companies, Inc. in Q1 2016 to a net income of $373 million in Q1 2017. This substantial improvement was driven by several factors, including a $269 million gain from the disposition of equity-method investments and an $171 million increase in operating income. The company also benefited from the absence of $112 million in impairment charges that impacted the prior year's results. Strategically, WMB is focusing on monetizing non-core assets, highlighted by the announced sale of its Geismar olefins facility for $2.1 billion, expected to close in the summer of 2017. Proceeds from this sale are earmarked for debt reduction and growth capital funding. The company also completed a significant financial repositioning with Williams Partners L.P. (WPZ) in January 2017, increasing its ownership stake and waiving incentive distribution rights, which is expected to enhance WPZ's financial flexibility and reduce parent-level debt. Looking ahead, WMB anticipates continued growth in its fee-based businesses, driven by demand for natural gas and NGLs, which should further reduce the impact of commodity price volatility on its operations. Planned capital expenditures for 2017 remain robust, focusing on pipeline expansions and gathering systems. The company reaffirmed its quarterly dividend of $0.30 per share.

Financial Highlights

48 data points
Beta

Revenue

$1.99B

Net Income

$373.00M

18.8% Net Margin

EPS (Diluted)

$0.45

Total Assets

$47.51B

Cash & Equivalents

$639.00M

Free Cash Flow

$216.00M

Financial Statements
Beta
Revenue$1.99B
SG&A Expenses$161.00M
Operating Expenses$1.56B
Operating Income$430.00M
Interest Expense$280.00M
Net Income$373.00M
EPS (Basic)$0.45
EPS (Diluted)$0.45
Shares Outstanding (Basic)824.55M
Shares Outstanding (Diluted)826.48M

Key Highlights

  • 1Net income attributable to The Williams Companies, Inc. dramatically improved to $373 million in Q1 2017 from a net loss of $65 million in Q1 2016.
  • 2The company recorded a $269 million gain from the disposition of equity-method investments (DBJV and Ranch Westex JV LLC) in Q1 2017.
  • 3Williams Companies announced the agreement to sell its Geismar olefins facility for $2.1 billion, with an expected closing in summer 2017.
  • 4Significant financial repositioning with Williams Partners L.P. (WPZ) occurred in January 2017, increasing WMB's ownership and waiving IDRs.
  • 5Total revenues increased by 20% to $1,988 million in Q1 2017 from $1,660 million in Q1 2016.
  • 6Operating income increased by 65% to $433 million in Q1 2017 from $262 million in Q1 2016.
  • 7The company plans to spend $2.1 billion to $2.8 billion on growth capital and investment expenditures in 2017, with a focus on pipeline expansions and gathering systems.

Frequently Asked Questions

The substantial improvement in net income is primarily driven by a $269 million gain from the disposition of certain equity-method investments (DBJV and Ranch Westex JV LLC) and an increase of $171 million in operating income. Additionally, the absence of $112 million in impairment charges on equity-method investments from the prior year also contributed significantly to the favorable year-over-year comparison.

Williams Companies is focused on monetizing non-core assets, exemplified by the announced sale of its Geismar olefins facility. They also completed a major financial repositioning with Williams Partners L.P. (WPZ) to enhance financial flexibility and reduce debt. The strategy also includes growing fee-based businesses to reduce commodity price exposure and investing in pipeline expansions and gathering systems.

In January 2017, Williams Companies completed a significant financial repositioning with WPZ. This involved permanently waiving general partner incentive distribution rights (IDRs) and converting the general partner interest to a non-economic interest in exchange for WPZ common units. This transaction, funded in part by an equity offering, increased WMB's ownership in WPZ to 74% and is expected to improve WPZ's cost of capital, reduce parent-level debt, and provide dividend growth flexibility.

Williams Companies anticipates significant growth capital and investment expenditures of $2.1 billion to $2.8 billion in 2017, primarily directed towards Transco expansions and other interstate pipeline growth projects, as well as gathering and processing systems in the Northeast. The company reaffirmed its regular quarterly cash dividend of $0.30 per share, or $1.20 annually.