10-QPeriod: Q2 FY2019

WILLIAMS COMPANIES, INC. Quarterly Report for Q2 Ended Jun 30, 2019

Filed August 1, 2019For Securities:WMB

Summary

Williams Companies, Inc. (WMB) reported revenues of $2.041 billion for the three months ended June 30, 2019, a slight decrease from $2.091 billion in the prior year period. Net income attributable to The Williams Companies, Inc. for the quarter increased significantly to $310 million, or $0.26 per diluted share, compared to $135 million, or $0.16 per diluted share, in the same period of 2018. This improvement was largely driven by increased service revenues, particularly from Transco expansion projects and the consolidation of UEOM, alongside a gain on the sale of an equity-method investment. For the six-month period ended June 30, 2019, total revenues were $4.095 billion, down from $4.179 billion in the prior year. However, net income attributable to The Williams Companies, Inc. surged to $505 million from $287 million in the comparable period of 2018. The company continued to execute strategic growth initiatives, including the acquisition of the remaining interest in UEOM and the sale of its interest in Jackalope, contributing to overall financial performance. Despite some segment-specific headwinds like lower commodity margins in the West segment, the company's focus on fee-based businesses and expansion projects on Transco is expected to support continued growth and shareholder returns.

Financial Highlights

49 data points
Beta

Revenue

$2.02B

Net Income

$310.00M

15.3% Net Margin

EPS (Diluted)

$0.26

Total Assets

$46.51B

Cash & Equivalents

$806.00M

Free Cash Flow

$572.00M

Financial Statements
Beta
Revenue$2.02B
SG&A Expenses$152.00M
Operating Expenses$1.54B
Operating Income$498.00M
Interest Expense$296.00M
Net Income$310.00M
EPS (Basic)$0.26
EPS (Diluted)$0.26
Shares Outstanding (Basic)1.21B
Shares Outstanding (Diluted)1.21B

Key Highlights

  • 1Net income attributable to common stockholders for Q2 2019 was $310 million, a substantial increase from $135 million in Q2 2018.
  • 2Diluted EPS for Q2 2019 was $0.26, up from $0.16 in Q2 2018.
  • 3The company completed the acquisition of the remaining 38% interest in UEOM for $740 million in March 2019, leading to its consolidation.
  • 4Williams Companies sold its 50% interest in Jackalope in April 2019 for $485 million, resulting in a gain of $122 million.
  • 5Service revenues increased by 11% year-over-year for the quarter, primarily driven by Transco expansion projects and higher volumes at Susquehanna Supply Hub.
  • 6Modified EBITDA for the Northeast G&P segment increased to $303 million from $255 million in the prior year quarter.
  • 7Despite overall revenue decline for the six-month period, net income attributable to common stockholders increased significantly to $505 million from $287 million.

Frequently Asked Questions

The primary drivers for the increase in net income were higher service revenues, particularly from Transco expansion projects and increased volumes at the Susquehanna Supply Hub. The consolidation of UEOM following its acquisition and a gain on the sale of the Jackalope equity-method investment also contributed significantly to the improved net income.

The acquisition of the remaining 38% interest in UEOM for $740 million in March 2019 resulted in the consolidation of UEOM's financial results into Williams Companies' statements. This led to an increase in revenues and operating expenses, as well as an increase in assets and liabilities on the balance sheet.

Williams Companies anticipates growth capital and investment expenditures for 2019 to be in the range of $2.3 billion to $2.5 billion. These expenditures are primarily focused on Transco expansion projects and developing gathering and processing infrastructure. The company intends to fund these through retained cash flow and available liquidity, and also utilized proceeds from the UEOM acquisition financing and the sale of its Jackalope interest to reduce debt and fund capital growth.

Lower commodity prices, particularly for NGLs, negatively impacted commodity product margins and certain revenue streams, especially in the West segment. The company noted a 26% decrease in per-unit non-ethane prices for NGLs in the first six months of 2019 compared to the prior year. While this had a dampening effect, the company's strategy of increasing fee-based businesses is intended to reduce the influence of commodity price volatility on overall results and cash flows.