10-QPeriod: Q3 FY2021

WILLIAMS COMPANIES, INC. Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 1, 2021For Securities:WMB

Summary

Williams Companies, Inc. (WMB) reported strong year-over-year revenue growth for the nine months ended September 30, 2021, driven by increased service revenues from expansion projects and higher product sales, largely due to the acquisition of Sequent and its upstream operations. Net income attributable to The Williams Companies, Inc. saw a significant increase, primarily due to the absence of substantial impairments recorded in the prior year and favorable changes in commodity margins. Despite an unfavorable swing in net unrealized commodity derivative losses, the company's core operations performed well, with notable contributions from its Transmission & Gulf of Mexico and Northeast G&P segments. The company also announced a new $1.5 billion share repurchase program and continues to invest in growth projects, signaling a commitment to shareholder returns and strategic expansion.

Financial Highlights

49 data points
Beta

Revenue

$2.48B

Net Income

$165.00M

6.7% Net Margin

EPS (Diluted)

$0.13

Total Assets

$45.98B

Cash & Equivalents

$214.00M

Free Cash Flow

$562.00M

Financial Statements
Beta
Revenue$2.48B
SG&A Expenses$152.00M
Operating Expenses$2.12B
Operating Income$355.00M
Interest Expense$292.00M
Net Income$165.00M
EPS (Basic)$0.14
EPS (Diluted)$0.13
Shares Outstanding (Basic)1.22B
Shares Outstanding (Diluted)1.22B

Key Highlights

  • 1Total revenues increased significantly to $7.37 billion for the nine months ended September 30, 2021, compared to $5.63 billion in the prior year, driven by higher product sales and service revenues.
  • 2Net income attributable to The Williams Companies, Inc. surged to $895 million for the nine months ended September 30, 2021, compared to $95 million in the prior year, largely due to the absence of significant impairments in 2020.
  • 3The acquisition of Sequent on July 1, 2021, contributed $54 million in product sales and had a notable impact on commodity derivatives, resulting in a $322 million net loss for the third quarter.
  • 4The company announced a new $1.5 billion share repurchase program in September 2021, indicating a commitment to returning capital to shareholders.
  • 5Transmission & Gulf of Mexico segment Modified EBITDA increased to $1.94 billion for the nine months ended September 30, 2021, driven by expansion projects and higher equity investee contributions.
  • 6Northeast G&P segment Modified EBITDA also grew to $1.25 billion, benefiting from increased equity investee performance and higher service revenues.
  • 7Capital expenditures for 2021 are projected to be between $1.0 billion and $1.2 billion, reflecting ongoing investments in growth projects and acquisitions.

Frequently Asked Questions

The substantial increase in net income for the nine months ended September 30, 2021, compared to the same period in 2020, was primarily driven by the absence of significant impairment charges (goodwill and equity-method investments) that were recorded in the first half of 2020. This 'easy comparison' artificially inflates the year-over-year net income growth.

The acquisition of Sequent on July 1, 2021, contributed to higher product sales and revenues. However, it also led to a significant net loss on commodity derivatives of $322 million in the third quarter of 2021, as Sequent's derivative instruments are generally not designated as hedges for accounting purposes, leading to mark-to-market volatility in earnings.

Williams Companies expects to spend between $1.0 billion and $1.2 billion on growth capital and investment expenditures in 2021. This includes funding for Transco expansions, Northeast G&P projects, and recent acquisitions. Additionally, the company authorized a new $1.5 billion share repurchase program in September 2021, demonstrating a focus on both strategic growth and shareholder returns.

Yes, the company acknowledges that its hedging activities might not be fully effective and could increase the volatility of its results. Unhedged risks, such as counterparty credit or performance risk, will always exist. Specifically, the Sequent segment's derivative instruments, not being designated as hedges for accounting purposes, can cause significant earnings volatility due to mark-to-market accounting, even if the underlying economic positions are managed.