The Williams Companies, Inc.
WMB
reported first-quarter 2022 adjusted earnings per share of 41 cents, beating the Zacks Consensus Estimate of 36 cents and surpassing the year-earlier period’s profit by 6 cents.
The outperformance was due to higher-than-expected contributions from one major segment. Adjusted EBITDA from the Transmission segment totaled $697 million, ahead of the Zacks Consensus Estimate of $689 million. Adjusted EBITDA increased year over year by 4% in the Northeast G&P unit.
Meanwhile, in the quarter ended Mar 31, Williams’ revenues of $2.5 billion missed the Zacks Consensus Estimate of $3.2 billion and underperformed the last year’s first-quarter revenues of $2.6 billion, which could be attributed to lower-than-expected numbers in the Northeast G&P and West units.
Key Takeaways
Adjusted EBITDA was $1.51 billion in the quarter under review, reflecting an increase of 6.8% from the corresponding period of 2021. The cash flow from operations totaled $1 billion, up 18.2% from the prior-year period.
Williams Companies, Inc. The Price, Consensus and EPS Surprise
Williams Companies, Inc. The price-consensus-eps-surprise-chart
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Williams Companies, Inc. The Quote
Segmental Analysis
Transmission & Gulf of Mexico:
Comprising WMB’s massive Transco pipeline system and Northwest Pipeline, the segment generated adjusted EBITDA of $697 million, rising 5.6% from the year-ago quarter. This unit’s performance was largely driven by much higher service revenues from Transco’s recent in-service Leidy South expansion project.
West:
This segment includes the gathering and processing assets in the Western region of the United States. It delivered adjusted EBITDA of $260 million, which is 17.1% higher than the $222 million recorded in the year-earlier quarter. The improvement in results was due to the benefits of higher commodity-based gathering and processing rates and greater Haynesville gathering volumes and favorable commodity margins.
Northeast G&P:
Engaged in natural gas gathering and processing, along with the NGL fractionation business in the Marcellus and Utica shale regions, the segment generated adjusted EBITDA of $418 million, up almost 4% from the prior-year quarter’s $402 million. This uptick could be attributed to higher service revenues, primarily related to the gathering rate escalations in various systems in the Northeast.
Gas & NGL Marketing Services:
This unit generated adjusted EBITDA of $65 million, down 30% from the prior-year quarter’s $93 million. This downside reflects a $57-million net unrealized loss in commodity derivatives, excluded from Adjusted EBITDA. Both measures were also impacted by the absence of a $58-million favorable impact of the Winter Storm Uri in 2021, which was offset by higher commodity margins and administrative costs associated with the Sequent business acquired in July 2021.
Costs, Capex & Balance Sheet
In the reported quarter, total costs and expenses remained almost the same as the year-ago quarter’s figure of $1.87 billion.
Williams’ total capital expenditure was $316 million in the first quarter, up from $277 million a year ago. As of Mar 31, 2022, the company had cash and cash equivalents of $604 million and a long-term debt of $20.8 billion, with a debt-to-capitalization of 59.8%.
2022 Guidance
WMB raised its full-year adjusted EBITDA guidance to the $5.9-$6.2 billion band from the earlier $5.6-$6 billion range, with growth capital spending in the range of $2.25 billion-$2.35 billion. Further, Williams expects to achieve a leverage ratio midpoint of 3.8, which, along with expectations to generate a positive free cash flow after dividends and capital expenditures (excluding the Trace acquisition of approximately $950 million), offers financial flexibility. The dividend guidance increased 3.7% on an annualized basis to $1.70 in 2022 from $1.64 in 2021.
The company anticipates maintenance capital expenditures between $650 million and $750 million, including the capital for emissions reduction and modernization initiatives.
Zacks Rank & Other Key Picks
Williams currently sports a Zacks Rank #1 (Strong Buy).
Investors interested in the energy space can look at other options like
PDC Energy
PDCE
,
Earthstone Energy
ESTE
and
Cenovus Energy
CVE
, each sporting a similar Zacks Rank. You can see
the complete list of today’s Zacks #1 Rank stocks here.
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