10-QPeriod: Q1 FY2018

WILLIAMS COMPANIES, INC. Quarterly Report for Q1 Ended Mar 31, 2018

Filed May 3, 2018For Securities:WMB

Summary

Williams Companies, Inc. (WMB) reported revenues of $2.09 billion for the first quarter of 2018, a slight increase from $1.99 billion in the same period of the prior year. Net income attributable to The Williams Companies, Inc. declined to $152 million from $373 million in Q1 2017, largely due to the absence of a significant gain on investment dispositions in the prior year and a higher income tax provision. Despite the net income decrease, the company's operating income saw a positive trend, increasing to $491 million from $430 million, driven by higher service revenues and lower selling, general, and administrative expenses. The company's primary segment, Williams Partners, generated $2.08 billion in revenues. The company continues to invest heavily in growth projects, with over $2.7 billion in growth capital and investment expenditures anticipated for 2018, primarily focused on Transco expansions and Northeast region gathering and processing systems. WMB also highlighted a solid liquidity position with $6.09 billion in available liquidity and an increase in its quarterly dividend to $0.34 per share.

Financial Highlights

49 data points
Beta

Revenue

$2.07B

Net Income

$152.00M

7.4% Net Margin

EPS (Diluted)

$0.18

Total Assets

$47.05B

Cash & Equivalents

$1.29B

Free Cash Flow

-$263.00M

Financial Statements
Beta
Revenue$2.07B
SG&A Expenses$132.00M
Operating Expenses$1.60B
Operating Income$491.00M
Interest Expense$273.00M
Net Income$152.00M
EPS (Basic)$0.18
EPS (Diluted)$0.18
Shares Outstanding (Basic)827.51M
Shares Outstanding (Diluted)830.20M

Key Highlights

  • 1Total revenues increased by 5% to $2.09 billion in Q1 2018 compared to $1.99 billion in Q1 2017, driven by higher service revenues from expansion projects at Transco.
  • 2Net income attributable to The Williams Companies, Inc. decreased by 59% to $152 million ($0.18 per share) from $373 million ($0.45 per share) in the prior year, mainly due to the absence of a large gain from asset dispositions in 2017.
  • 3Operating income improved by 14% to $491 million from $430 million, benefiting from increased service revenues and reduced selling, general, and administrative expenses.
  • 4The company maintained a strong liquidity position with $6.09 billion available as of March 31, 2018, consisting of cash and credit facilities.
  • 5Williams Companies announced an increase in its quarterly dividend to $0.34 per share, up from $0.30 per share in the prior year.
  • 6Significant capital expenditures are planned for 2018, with at least $2.7 billion allocated to growth projects, including Transco expansions and Northeast region infrastructure.
  • 7The company is evaluating the potential impact of recent FERC policy changes regarding the recovery of income tax costs in rates for natural gas pipelines.

Frequently Asked Questions

The primary driver for the decrease in net income attributable to The Williams Companies, Inc. was the absence of a $269 million gain from the disposition of certain equity-method investments that occurred in the first quarter of 2017. Additionally, a higher income tax provision in 2018, partly due to the absence of a prior year tax benefit from releasing a valuation allowance, also contributed to the decline.

Total revenues increased by 5% to $2.09 billion in the first quarter of 2018, up from $1.99 billion in the same period of 2017. This growth was primarily driven by an increase in service revenues, which benefited from higher transportation fee revenues at Transco due to expansion projects placed in service in 2017 and 2018, and from higher gathering volumes.

Williams Companies' strategy focuses on operating large-scale, interstate natural gas transmission and midstream infrastructure, connecting supply basins to growing markets. Key priorities include growing fee-based businesses, executing growth projects, and maintaining cost discipline. For 2018, the company plans to invest at least $2.7 billion in growth capital, with significant allocations to Transco expansions and gathering/processing systems in the Northeast region. The company also aims to provide an attractive return to shareholders, as evidenced by the increased quarterly dividend.

Yes, the Federal Energy Regulatory Commission (FERC) issued a policy statement in March 2018 that will no longer permit Master Limited Partnership (MLP) pipelines to recover an income tax allowance in their cost of service. The company is evaluating the impact of this and other related tax reform policies, which could adversely affect future tariff-based rates collected by its interstate natural gas pipelines.