10-QPeriod: Q3 FY2019

WILLIAMS COMPANIES, INC. Quarterly Report for Q3 Ended Sep 30, 2019

Filed October 31, 2019For Securities:WMB

Summary

Williams Companies, Inc. (WMB) reported its third-quarter 2019 financial results, showcasing a mixed performance with notable increases in service revenues driven by pipeline expansion projects and the consolidation of UEOM. However, a significant decrease in product sales and higher operating expenses tempered overall revenue growth. Net income attributable to The Williams Companies, Inc. saw a substantial increase year-over-year, benefiting from the absence of prior-year charges and a gain on asset sale. The company continued its strategic focus on expanding its fee-based businesses, particularly through Transco expansion projects and growth in the Northeast G&P segment. Despite challenges in commodity-related segments and ongoing legal matters, WMB affirmed its liquidity position and reiterated its commitment to shareholder returns through consistent dividend payments, underscoring a resilient operational strategy.

Financial Highlights

49 data points
Beta

Revenue

$1.99B

Net Income

$221.00M

11.1% Net Margin

EPS (Diluted)

$0.18

Total Assets

$46.28B

Cash & Equivalents

$247.00M

Free Cash Flow

$72.00M

Financial Statements
Beta
Revenue$1.99B
SG&A Expenses$130.00M
Operating Expenses$1.37B
Operating Income$628.00M
Interest Expense$296.00M
Net Income$221.00M
EPS (Basic)$0.18
EPS (Diluted)$0.18
Shares Outstanding (Basic)1.21B
Shares Outstanding (Diluted)1.21B

Key Highlights

  • 1Total revenues decreased to $1,999 million in Q3 2019 from $2,303 million in Q3 2018, primarily due to a decline in product sales.
  • 2Net income attributable to The Williams Companies, Inc. increased to $221 million in Q3 2019 from $129 million in Q3 2018, largely due to the absence of a prior year valuation allowance on deferred tax assets and a gain on the sale of an equity-method investment.
  • 3Service revenues increased by 9% to $1,495 million in Q3 2019, driven by higher transportation fees from Transco expansion projects and the consolidation of UEOM.
  • 4Operating income increased significantly to $628 million from $501 million, reflecting the revenue growth and lower costs associated with certain prior-year items.
  • 5The company acquired the remaining 38% interest in UEOM for $741 million, consolidating its operations and enhancing its position in the Utica Shale play.
  • 6Williams sold its 50% interest in Jackalope in April 2019 for $485 million, resulting in a $122 million gain on disposition.
  • 7The company continues to manage significant ongoing legal proceedings, including environmental litigation and a dispute with Energy Transfer, with no material impact currently anticipated on financial position.

Frequently Asked Questions

The significant increase in Net Income Attributable to The Williams Companies, Inc. in Q3 2019, from $129 million to $221 million, was primarily driven by the absence of a $105 million valuation allowance on certain deferred tax assets recorded in Q3 2018 following the WPZ Merger, and a $122 million gain from the sale of the company's interest in Jackalope. These factors more than offset the decrease in operating income and other unfavorable items.

Williams acquired the remaining 38% interest in UEOM in March 2019 for $741 million, leading to its consolidation. This acquisition contributed positively to service revenues in the Northeast G&P segment due to increased gathering volumes and operational synergies. The consolidation also increased operating and maintenance expenses, but the overall impact on net income was positive.

Williams is actively pursuing growth through various expansion projects, particularly on its Transco pipeline system, with projects like Rivervale South to Market, Gateway, and Hillabee nearing completion or in progress. The company anticipates 2019 growth capital and investment expenditures to range from $2.3 billion to $2.5 billion, focusing on Transco expansions and developing gathering and processing infrastructure in its key segments. These projects are largely supported by long-term, fee-based contracts, which are expected to reduce the influence of commodity price fluctuations on future cash flows.

Key risks and challenges include potential opposition and regulatory hurdles for infrastructure projects, unexpected increases in capital expenditures or project delays, counterparty credit risk, adverse changes in customer drilling and production activities impacting volumes, lower-than-anticipated demand for natural gas and NGLs, general economic downturns, and physical damages to facilities. The company also faces ongoing litigation related to environmental matters and historical business practices.