Summary
Williams Companies, Inc. (WMB) reported a decrease in net income for the six months ended June 30, 2020, to a loss of $215 million, compared to a profit of $505 million in the prior year period. This decline was significantly impacted by substantial impairments of equity-method investments totaling $938 million and an $187 million impairment of goodwill, both largely driven by market conditions in the first quarter of 2020 related to COVID-19 and lower commodity prices. Despite these impairments, the company's core operations, particularly its Transmission & Gulf of Mexico segment, demonstrated resilience, with Modified EBITDA showing an increase for both the three and six-month periods. The company also maintained a strong liquidity position, with $1.13 billion in cash and cash equivalents and ample capacity under its credit facility.
Financial Highlights
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Financial Statements
Beta
| Revenue | $1.77B |
| SG&A Expenses | $127.00M |
| Operating Expenses | $1.17B |
| Operating Income | $612.00M |
| Interest Expense | $294.00M |
| Net Income | $303.00M |
| EPS (Basic) | $0.25 |
| EPS (Diluted) | $0.25 |
| Shares Outstanding (Basic) | 1.21B |
| Shares Outstanding (Diluted) | 1.21B |
Key Highlights
- 1Net income attributable to common stockholders for the six months ended June 30, 2020, was a loss of $215 million, a significant decrease from a profit of $505 million in the same period of 2019.
- 2The company recognized substantial impairments, including $938 million for equity-method investments and $187 million for goodwill, primarily in Q1 2020 due to market conditions exacerbated by COVID-19 and lower commodity prices.
- 3Total revenues for the six months decreased to $3.69 billion from $4.10 billion in the prior year, with product sales seeing a significant decline.
- 4The Transmission & Gulf of Mexico segment remains a strong performer, with its Modified EBITDA increasing in both the three-month and six-month periods year-over-year.
- 5Despite the net loss, the company maintained a robust liquidity position, with $1.13 billion in cash and cash equivalents and $4.5 billion available under its credit facility as of June 30, 2020.
- 6Customer bankruptcies, notably Chesapeake Energy, are being monitored, though management believes its services are critical and the financial impact is currently manageable.
- 7The company successfully completed several debt offerings in the second quarter of 2020, demonstrating continued access to capital markets.
Frequently Asked Questions
The primary reasons for the significant decline in net income for the first six months of 2020 were large non-cash impairment charges, including $938 million for equity-method investments and $187 million for goodwill. These impairments were largely triggered by adverse market conditions in the first quarter of 2020, influenced by the COVID-19 pandemic and a sharp decline in commodity prices.
While the company stated its financial condition, results of operations, and liquidity have not been materially impacted by direct effects of COVID-19, the pandemic and related commodity price declines led to significant impairments of goodwill and equity-method investments. It also highlighted challenges for certain producer customers, some of whom filed for bankruptcy. However, the company noted that its natural gas transmission business is largely unaffected due to its contracted nature, and its midstream services are critical to producer operations.
As of June 30, 2020, Williams Companies maintained a strong liquidity position with $1.13 billion in cash and cash equivalents and $4.5 billion in available capacity under its credit facility. The company managed its debt by retiring $1.5 billion of long-term debt and issuing approximately $2.2 billion of new long-term debt in the first half of 2020. They also planned to early retire an additional $600 million in notes.
The company operates through three main segments: Transmission & Gulf of Mexico, Northeast G&P, and West. The Transmission & Gulf of Mexico segment showed resilience, with its Modified EBITDA increasing year-over-year for both the three and six-month periods. The Northeast G&P segment also saw an increase in Modified EBITDA, primarily due to higher service revenues and equity investment contributions. The West segment's Modified EBITDA was flat year-over-year for the six-month period but saw an increase for the three-month period, driven by the absence of asset impairments.