10-QPeriod: Q1 FY2020

WILLIAMS COMPANIES, INC. Quarterly Report for Q1 Ended Mar 31, 2020

Filed May 4, 2020For Securities:WMB

Summary

Williams Companies, Inc. (WMB) reported a significant net loss of $570 million for the first quarter of 2020, a sharp decline from a net income of $214 million in the prior year period. This loss was primarily driven by substantial non-cash charges, including an $864 million impairment of equity-method investments and a $187 million impairment of goodwill. Total revenues also decreased by 7% to $1.91 billion from $2.05 billion, largely due to lower product sales and commodity-related service revenues. Despite the reported loss, the company's core natural gas transmission business, which is largely contracted and regulated, remained stable, contributing positively to operating income. However, the broader energy market downturn, exacerbated by COVID-19 and oil price volatility, significantly impacted the valuation of the company's investments and goodwill. The company's liquidity position remains adequate, with $400 million in cash and cash equivalents and significant availability under its credit facility. Management is focusing on operational cost discipline and managing capital expenditures, with projected spending between $1.1 billion and $1.3 billion for 2020. The company also continues to pay its quarterly dividend, recently increased to $0.40 per share. Investors should closely monitor the impact of ongoing commodity price volatility and the broader economic environment on the company's investments and potential for future impairments.

Financial Highlights

49 data points
Beta

Revenue

$1.90B

Net Income

-$517.00M

-27.2% Net Margin

EPS (Diluted)

$-0.43

Total Assets

$44.63B

Cash & Equivalents

$400.00M

Free Cash Flow

$481.00M

Financial Statements
Beta
Revenue$1.90B
SG&A Expenses$113.00M
Operating Expenses$1.48B
Operating Income$431.00M
Interest Expense$296.00M
Net Income-$517.00M
EPS (Basic)$-0.43
EPS (Diluted)$-0.43
Shares Outstanding (Basic)1.21B
Shares Outstanding (Diluted)1.21B

Key Highlights

  • 1Reported a net loss of $570 million for Q1 2020, a significant decrease from net income of $195 million attributable to common stockholders in Q1 2019.
  • 2Recorded substantial non-cash impairments: $938 million for equity-method investments and $187 million for goodwill.
  • 3Total revenues declined 7% to $1.91 billion from $2.05 billion, impacted by lower product sales and commodity-related service revenues.
  • 4The Transmission & Gulf of Mexico segment showed resilience with Modified EBITDA of $662 million, an increase driven by rate case settlements and expansion projects.
  • 5Liquidity remains strong with $400 million in cash and cash equivalents and $2.8 billion available under credit facilities.
  • 6Declared a quarterly cash dividend of $0.40 per share, a slight increase from the previous year.
  • 7Acknowledged potential risks from COVID-19 and volatile commodity prices, leading to a cautious outlook and adjusted capital spending plans.

Frequently Asked Questions

The primary driver of the significant net loss was a substantial non-cash impairment charge of $938 million related to equity-method investments and an impairment of goodwill totaling $187 million. These charges reflect the severe impact of macroeconomic conditions, including the COVID-19 pandemic and volatile commodity prices, on the fair value of certain assets and investments.

The company's core natural gas transmission business, particularly the Transmission & Gulf of Mexico segment, demonstrated resilience. This segment reported an increase in Modified EBITDA to $662 million, benefiting from rate case settlements and expansion projects, highlighting the stability of its contracted and regulated operations.

Williams Companies maintains a solid liquidity position with $400 million in cash and cash equivalents and access to $2.8 billion under its credit facility as of March 31, 2020. The company expects to have sufficient liquidity for 2020 and is managing capital expenditures, projecting between $1.1 billion and $1.3 billion for the year. However, management acknowledges potential risks from COVID-19 and commodity price volatility.

The company's interstate natural gas transmission business is largely insulated from commodity price volatility due to long-term firm reservation contracts. However, its gathering and processing businesses, while mitigated by the physical nature of services, face potential challenges from decreased producer activity and counterparty credit risk. The COVID-19 pandemic and oil price decline have directly led to impairments and a cautious outlook, although the company has not seen material direct operational impacts to date.