10-QPeriod: Q3 FY2020

WILLIAMS COMPANIES, INC. Quarterly Report for Q3 Ended Sep 30, 2020

Filed November 2, 2020For Securities:WMB

Summary

Williams Companies, Inc. (WMB) reported third-quarter 2020 results showing a net income of $309 million, or $0.25 per diluted share, attributable to common stockholders. This represents a significant increase from the prior year's $221 million net income ($0.18 per diluted share). The improvement was largely driven by the absence of significant impairment charges that impacted the prior year's comparable period, coupled with solid operational performance in key segments. Total revenues for the quarter were $1.93 billion, a slight decrease from $1.99 billion in the prior year. Despite a challenging economic environment influenced by COVID-19 and volatile commodity prices, the company highlighted the resilience of its core business, particularly its interstate natural gas pipeline operations which are largely supported by long-term, firm transportation contracts. Management emphasized continued focus on operational excellence, cost control, and maintaining financial flexibility amidst ongoing market uncertainties.

Financial Highlights

49 data points
Beta

Revenue

$1.92B

Net Income

$309.00M

16.1% Net Margin

EPS (Diluted)

$0.25

Total Assets

$44.32B

Cash & Equivalents

$70.00M

Free Cash Flow

$127.00M

Financial Statements
Beta
Revenue$1.92B
SG&A Expenses$114.00M
Operating Expenses$1.29B
Operating Income$641.00M
Interest Expense$292.00M
Net Income$309.00M
EPS (Basic)$0.25
EPS (Diluted)$0.25
Shares Outstanding (Basic)1.21B
Shares Outstanding (Diluted)1.22B

Key Highlights

  • 1Net income attributable to common stockholders increased to $309 million ($0.25/share) for Q3 2020, up from $221 million ($0.18/share) in Q3 2019, largely due to the absence of prior-year impairment charges.
  • 2Total revenues for Q3 2020 were $1.93 billion, a slight decrease from $1.99 billion in Q3 2019.
  • 3The company reported $938 million in impairments of equity-method investments during the nine months ended September 30, 2020, primarily due to market conditions impacting the energy sector.
  • 4A goodwill impairment of $187 million was recognized in the first quarter of 2020 related to the Northeast G&P reporting unit.
  • 5Williams Companies maintained strong liquidity, with $4.53 billion in available liquidity as of September 30, 2020, including cash and credit facility capacity.
  • 6The company successfully completed several debt offerings and retirements during the first nine months of 2020, demonstrating proactive debt management.
  • 7Chesapeake Energy, a significant customer, filed for Chapter 11 bankruptcy; WMB stated that it does not anticipate significant credit losses or impairment charges related to this customer at this time, citing the essential nature of its services.

Frequently Asked Questions

The primary driver for the significant increase in net income attributable to common stockholders in the third quarter of 2020 compared to the third quarter of 2019 is the absence of substantial impairment charges that affected the prior year's results. Specifically, the prior year included impairment charges for equity-method investments, whereas the current period did not have comparable charges, contributing to a more favorable net income.

Williams Companies has actively managed its debt portfolio. During the first nine months of 2020, the company retired approximately $1.5 billion of long-term debt and issued approximately $2.2 billion of new long-term debt. Notably, they also early retired $600 million of senior unsecured notes in August 2020. The company also maintains a significant credit facility and commercial paper program to ensure liquidity.

Williams Companies acknowledged that Chesapeake Energy filed for Chapter 11 bankruptcy protection. However, based on their evaluation, the company does not expect significant credit losses or impairment charges related to Chesapeake at this time. This assessment is based on the physical nature of the services provided by WMB, which are critical for Chesapeake's ability to transport its product, and the low likelihood of contract rejection. WMB also noted prior experiences with customer bankruptcies where receivables were ultimately collected.

Williams Companies identified several potential risks and obstacles in its outlook. These include the continued negative impacts of COVID-19 leading to a global recession, potential opposition and regulatory hurdles for infrastructure projects, counterparty credit and performance risks (including customer bankruptcies), unexpected increases in capital expenditures or delays, changes in customer drilling and production activities, lower than anticipated demand for natural gas, general economic downturns, physical damages to facilities, and other risks previously detailed in their annual filings.