10-QPeriod: Q3 FY2017

WILLIAMS COMPANIES, INC. Quarterly Report for Q3 Ended Sep 30, 2017

Filed November 2, 2017For Securities:WMB

Summary

Williams Companies, Inc. (WMB) reported a mixed financial performance for the nine months ended September 30, 2017. While the company saw a significant increase in net income attributable to The Williams Companies, Inc. to $487 million, up from a loss of $409 million in the same period of 2016, this was largely driven by a substantial gain on the sale of its Geismar Interest, which generated $1.095 billion. Excluding this one-time event, the underlying operational performance showed improvement in service revenues, up 5% for the nine-month period, driven by expansion projects and higher natural gas transportation fees. However, the company also recorded significant impairments totaling $1.236 billion for the nine months ended September 30, 2017, primarily related to gathering operations and NGL pipeline assets. Despite these impairments, the company's liquidity position remained strong, with total available liquidity of $5.772 billion as of September 30, 2017. WMB also continued its commitment to shareholder returns, paying a regular quarterly dividend of $0.30 per share.

Financial Highlights

48 data points
Beta

Revenue

$1.89B

Net Income

$33.00M

1.7% Net Margin

EPS (Diluted)

$0.04

Total Assets

$46.12B

Cash & Equivalents

$1.17B

Free Cash Flow

$61.00M

Financial Statements
Beta
Revenue$1.89B
SG&A Expenses$138.00M
Operating Expenses$1.62B
Operating Income$274.00M
Interest Expense$267.00M
Net Income$33.00M
EPS (Basic)$0.04
EPS (Diluted)$0.04
Shares Outstanding (Basic)826.78M
Shares Outstanding (Diluted)829.37M

Key Highlights

  • 1Reported Net Income Attributable to The Williams Companies, Inc. of $487 million for the nine months ended September 30, 2017, a significant improvement from a net loss of $409 million in the prior year period.
  • 2Generated a substantial $1.095 billion gain on the sale of its Geismar Interest in July 2017, significantly boosting reported net income.
  • 3Service revenues increased by 5% to $5.803 billion for the nine months ended September 30, 2017, driven by expansion projects and higher natural gas transportation fees.
  • 4Recorded significant impairments of certain assets totaling $1.236 billion for the nine months ended September 30, 2017, impacting profitability.
  • 5Maintained strong liquidity with $5.772 billion in available liquidity as of September 30, 2017.
  • 6Paid a regular quarterly dividend of $0.30 per share, reflecting continued commitment to shareholder returns.

Frequently Asked Questions

The primary driver of the significant increase in net income was the $1.095 billion gain recognized from the sale of Williams Companies, Inc.'s Geismar Interest in July 2017. This one-time gain significantly boosted the reported profitability for the period.

The company recorded impairments totaling $1.236 billion for the nine months ended September 30, 2017. These impairments were primarily related to certain gathering operations in the Mid-Continent and Marcellus South regions, as well as NGL pipeline assets. This indicates a potential overvaluation of these assets or a decline in their expected future cash flows.

In January 2017, the company completed a financial repositioning with WPZ, which involved permanently waiving incentive distribution rights (IDRs) and converting its general partner interest. This transaction resulted in the issuance of WPZ common units to WMB, a significant increase in WMB's equity stake in WPZ to 74%, and a decrease in noncontrolling interests. It also provided WMB with proceeds that were used to fund further investments in WPZ, improving WPZ's cost of capital and reducing WMB's parent-level debt.

The company expects its fee-based businesses to become an even more significant component of its portfolio, which will help reduce the influence of commodity price fluctuations on its cash flows. This is driven by continued growth in demand for natural gas and natural gas products from sources like LNG exports, industrial demand, and power generation.