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WILLIAMS COMPANIES, INC. 8-K Report, Financial Results (May 6, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed May 6, 2024
Period End
May 6, 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 May 6, 2024. Cited figures are marked; the original filing is the authoritative source.

Williams (NYSE: WMB) reported first-quarter 2024 results that management characterized as strong, with GAAP net income of $631 milliona ($0.52 per diluted share) and adjusted net income of $719 million ($0.59 per diluted share, up 5% year over year).

Adjusted EBITDA rose 8% to $1.934 billionb, and AFFO increased 4% to $1.507 billion, producing a dividend coverage ratio of 2.60x. GAAP net income declined by $295 million, driven mainly by a $419 million unfavorable swing in unrealized commodity derivative gains and losses, higher interest expense, and higher operating costs and depreciation tied to recent acquisitions. The non-GAAP improvement was driven by acquisitions (Gulf Coast Storage, DJ Basin) and expansion projects such as Transco's Regional Energy Access.

The Transmission & Gulf of Mexico segment was the main driver, with Adjusted EBITDA up $111 million to $839 millionc, while Gas & NGL Marketing Services Adjusted EBITDA fell $42 million to $189 million on weaker commodity margins. Management said first-quarter performance puts the company on track for the top half of its 2024 Adjusted EBITDA guidance range of $6.8 billion to $7.1 billion. It reiterated 2024 growth capex of $1.45 to $1.75 billion, maintenance capex of $1.1 to $1.3 billion, a 3.85x midpoint leverage target, and a 2024 dividend of $1.90 per share, up 6.1%.

Investors should weigh the strong non-GAAP growth against the GAAP earnings decline, the higher leverage (Debt-to-Adjusted EBITDA of 3.79xd versus 3.57x a year earlier), and the reliance on acquisitions for growth. The filing furnishes the earnings release under Item 2.02 and is not deemed filed for Section 18 purposes. Non-GAAP reconciliations are included in the exhibit.

02—Key points

Key Highlights

  1. GAAP net income of $631 million ($0.52 per diluted share), down from $926 million ($0.76) a year earlier, largely due to unrealized derivative losses.
  2. Adjusted EBITDA rose 8% to $1.934 billion, and adjusted EPS rose 5% to $0.59, driven by acquisitions and expansion projects.
  3. AFFO increased 4% to $1.507 billion, giving a 2.60x dividend coverage ratio versus 2.65x a year earlier.
  4. Transmission & Gulf of Mexico Adjusted EBITDA increased 15% to $839 million, while Gas & NGL Marketing Services Adjusted EBITDA declined to $189 million.
  5. Management expects 2024 Adjusted EBITDA in the top half of the $6.8-$7.1 billion guidance range and reiterated 2025 Adjusted EBITDA guidance of $7.2-$7.6 billion.
  6. Debt-to-Adjusted EBITDA rose to 3.79x from 3.57x, and the company closed the $1.851 billion Gulf Coast Storage acquisition in January 2024.
  7. The annualized dividend was increased 6.1% to $1.90 for 2024.

03—Questions

Frequently Asked Questions

  1. Why did GAAP net income fall while adjusted results improved?

    GAAP net income decreased $295 million mainly because of a $419 million unfavorable change in unrealized gains and losses on commodity derivatives, along with higher interest expense and higher operating, depreciation, and interest costs from recent acquisitions. Adjusted results remove these derivative mark-to-market effects, and Adjusted EBITDA increased $139 million on acquisition and expansion contributions.

  2. Is Williams on track to meet its 2024 guidance?

    Management said first-quarter results position the company to finish in the top half of its $6.8-$7.1 billion 2024 Adjusted EBITDA guidance range. Q1 Adjusted EBITDA of $1.934 billion is a strong start, though full-year results will depend on the rest of the year.

  3. How secure is the dividend?

    The first-quarter AFFO dividend coverage ratio was 2.60x, meaning AFFO covered common dividends about 2.6 times. The 2024 annualized dividend of $1.90 is 6.1% above 2023, and management reiterated 5%-7% dividend growth expectations for 2025.

  4. What is driving the Transmission & Gulf of Mexico growth?

    Adjusted EBITDA for the segment rose $111 million to $839 million, driven by contributions from the Gulf Coast Storage and MountainWest acquisitions and the Regional Energy Access expansion project. Record contracted transmission capacity of 33.9 Bcf/d also supports fee-based revenue.

  5. What are the main balance sheet and leverage considerations?

    Debt-to-Adjusted EBITDA increased to 3.79x from 3.57x, reflecting debt raised to fund acquisitions such as Gulf Coast Storage. Management still expects a 3.85x leverage ratio at the 2024 midpoint, and cash fell to $667 million at quarter end from $2.15 billion at year end, partly due to the acquisition payment.

04—Continue

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