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WILLIAMS COMPANIES, INC. 8-K Report, Financial Results (Feb 14, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed February 14, 2024
Period End
February 14, 2024
Security
WMB
In the record · 2016–202610-K1110-Q328-K153

WMB filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 153 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Aug ’18Aug ’18
  2. Leadership change8-K · Feb ’20Feb ’20
  3. Material agreement8-K · Aug ’22Aug ’22
  4. Material agreement8-K · Sep ’26Sep ’26

01—Abstract

Summary

Summary of the 8-K filed February 14, 2024. Cited figures are marked; the original filing is the authoritative source.

The Williams Companies (NYSE: WMB) reported fourth-quarter and full-year 2023 results on February 14, 2024, describing 2023 as another year of record results driven by its natural gas-focused, fee-based midstream model.

Full-year GAAP net income was $3.273 billiona ($2.68 per diluted share), up 60% year over year, but this was inflated by a one-time $534 million gain from the favorable Energy Transfer litigation resolution and a $909 million favorable swing in unrealized commodity derivative gains. The more representative measures show steadier growth: Adjusted EBITDA rose 6% to $6.779 billion, Adjusted EPS rose 5% to $1.91, and AFFO grew 6% to $5.213 billion, giving a dividend coverage ratio of 2.39x on an AFFO basis. Cash flow from operations rose 24% to $6.055 billion, helped by the litigation receipt and favorable working capital changes.

Management guided 2024 Adjusted EBITDA to $6.8b-$7.1 billion and 2025 to $7.2-$7.6 billion, implying an expected five-year CAGR of about 8%. The growth is supported by Transco expansions such as Southeast Supply Enhancement, Regional Energy Access, and Carolina Market Link, plus acquisitions including the MountainWest pipeline, the DJ Basin assets, and a 115 Bcf Gulf Coast storage portfolio.

Leverage ended the year at 3.58x Debt-to-Adjusted EBITDA, with a 2024 midpoint target of 3.85x, and the dividend was raised 6.1% to $1.90c annualized. Investors should note that 2024 and 2025 growth capital spending will be elevated, and that 2025 is positioned as the anticipated breakout year as several large fee-based projects enter service.

02—Key points

Key Highlights

  1. Record 2023 results: Adjusted EBITDA of $6.779 billion (up 6%), AFFO of $5.213 billion (up 6%), and Adjusted EPS of $1.91 (up 5%), with record gathering volumes near 18 Bcf/d and contracted transmission capacity of 32.3 Bcf/d.
  2. GAAP net income of $3.273 billion ($2.68/diluted share) was up 60%, but it was boosted by a one-time $534 million Energy Transfer litigation gain and a $909 million favorable swing in unrealized derivative gains, so it overstates underlying performance.
  3. 2024 Adjusted EBITDA guidance of $6.8-$7.1 billion and 2025 guidance of $7.2-$7.6 billion, implying an expected five-year CAGR of roughly 8%.
  4. Dividend raised 6.1% to $1.90 annualized (from $1.79), marking 50 consecutive years of dividend payments, with a 2.39x AFFO coverage ratio.
  5. Strategic acquisitions added take-or-pay transmission and fee-based storage, including MountainWest (over 8 Bcf/d of transmission and 56 Bcf of storage), the DJ Basin assets ($544 million in Q4 2023), and a 115 Bcf Gulf Coast storage portfolio.
  6. Growth pipeline includes Transco projects such as Carolina Market Link (in service 1Q 2024), phase one of Regional Energy Access (in service 4Q 2023), and the 1.6 Bcf/d Southeast Supply Enhancement (FERC application filed), with 18 high-return projects in execution.
  7. Leverage ended 2023 at 3.58x Debt-to-Adjusted EBITDA, with a 2024 midpoint target of 3.85x; 2024 growth capex is guided at $1.45-$1.75 billion and maintenance capex at $1.1-$1.3 billion.

03—Questions

Frequently Asked Questions

  1. How much of the 2023 earnings growth was driven by one-time items?

    A significant portion of GAAP growth was non-recurring. The $534 million Energy Transfer litigation gain and a $909 million favorable change in unrealized commodity derivative gains/losses lifted GAAP net income, while the $129 million Bayou Ethane sale gain also contributed. Adjusted EBITDA, which excludes these items, grew a more modest 6%, and Adjusted EPS grew 5%.

  2. Is the dividend secure, and how much room is there for growth?

    The dividend appears well covered. The AFFO-based coverage ratio was 2.39x for 2023 and management guided to about 2.12x-2.23x for 2024. The 6.1% increase to $1.90 annualized is in line with management's 5%-7% dividend growth framework, and the company has paid dividends for 50 consecutive years.

  3. What drives the expected acceleration in 2025 results?

    Management expects 2025 Adjusted EBITDA of $7.2-$7.6 billion, about 8% growth at the midpoint over 2024, as several large fee-based projects enter service. Key contributors include Transco expansions such as Regional Energy Access (remaining phase due by 4Q 2024) and Southeast Supply Enhancement, plus full-year benefits from 2023 acquisitions.

  4. What are the key balance sheet and capital spending considerations?

    Leverage ended 2023 at 3.58x, and management anticipates rising to about 3.85x at the 2024 midpoint as growth capex of $1.45-$1.75 billion and maintenance capex of $1.1-$1.3 billion is deployed. Long-term debt due within one year rose to $2.34 billion, which investors should monitor as refinancing needs. Capital investments excluding acquisitions were $2.71 billion in 2023.

04—Continue

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