Williams Delivers Strong Second-Quarter Results
Press Release
TULSA, Okla.–Aug. 5, 2024– Williams (NYSE: WMB) today announced its unaudited financial results for the three and six months ended June 30, 2024.
Financial results build on track record of year-over-year consecutive growth
- GAAP net income of $401 million, or $0.33 per diluted share (EPS)
- Adjusted net income of $521 million, or $0.43 per diluted share (Adj. EPS)
- Record 2Q Adjusted EBITDA of $1.667 billion – up $56 million or 3% vs. 2Q 2023
- Cash flow from operations (CFFO) of $1.279 billion
- Available funds from operations (AFFO) of $1.250 billion – up $35 million or 3% vs. 2Q 2023
- Dividend coverage ratio of 2.16x (AFFO basis)
- On track to achieve top half of 2024 financial guidance
Crisp project execution and accelerating natural gas demand drive strong financial outlook
- Optimized portfolio by exiting Aux Sable joint venture position and consolidating ownership interest in Gulf of Mexico Discovery system
- Placed Transco’s Regional Energy Access into full service ahead of schedule on Aug. 1
- Placed Marcellus South and MountainWest’s Uinta Basin expansions in-service
- Significant emissions reductions and cost savings accomplished in replacing 57 Transco and Northwest Pipeline compressor units to date
- Initiated construction activities on Louisiana Energy Gateway gathering, treating and carbon capture & sequestration project
- Began construction on Transco’s Texas to Louisiana Energy Pathway expansion
- Signed precedent agreement on Transco’s Gillis West expansion
- Published 2023 Sustainability Report; set 2028 methane intensity goal for OGMP 2.0
CEO Perspective
Alan Armstrong, president and chief executive officer, made the following comments:
“Our record second quarter Adjusted EBITDA was driven primarily by the strong performance of our transmission and storage business. Even in this environment of low gas prices, we continue to deliver and are on track to achieve the top half of financial guidance this year and even higher levels of growth in 2025 with an expected five-year compound annual growth rate of over 12 percent on our Adjusted EPS, 2020 to 2025.
“Our teams have continued to execute on our strategy across all fronts, including placing projects into service in the Northeast, the West and the Deepwater Gulf of Mexico. In addition to bringing Transco’s Regional Energy Access expansion fully online ahead of schedule, we have initiated construction activities on the Louisiana Energy Gateway gathering, treating and carbon capture & sequestration project as well as Transco’s Texas to Louisiana Energy Pathway expansion. We also continued to optimize our portfolio by selling our stake in the Aux Sable joint venture at an attractive premium and consolidated our ownership interest in the Gulf of Mexico Discovery system at an attractive value, which allows us to improve efficiencies in this commercially active and growing region.”
Armstrong added, “We’ve been delivering consecutive year-over-year growth for more than a decade at Williams, and all signals indicate that the future will be even stronger as demand for natural gas accelerates due to increasing electrification and LNG exports. With our powerful backlog of projects and outstanding track record of execution, no other company is better positioned than Williams to convert these opportunities into compounding returns for our shareholders.”
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Williams Summary Financial Information |
2Q |
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Year to Date |
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Amounts in millions, except ratios and per-share amounts. Per share amounts are reported on a diluted basis. Net income amounts are from continuing operations attributable to The Williams Companies, Inc. available to common stockholders. |
2024 |
2023 |
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2024 |
2023 |
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GAAP Measures |
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Net Income |
$401 |
$547 |
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$1,032 |
$1,473 |
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Net Income Per Share |
$0.33 |
$0.45 |
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$0.84 |
$1.20 |
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Cash Flow From Operations |
$1,279 |
$1,377 |
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$2,513 |
$2,891 |
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Non-GAAP Measures (1) |
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Adjusted EBITDA |
$1,667 |
$1,611 |
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$3,601 |
$3,406 |
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Adjusted Net Income |
$521 |
$515 |
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$1,240 |
$1,199 |
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Adjusted Earnings Per Share |
$0.43 |
$0.42 |
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$1.01 |
$0.98 |
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Available Funds from Operations |
$1,250 |
$1,215 |
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$2,757 |
$2,660 |
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Dividend Coverage Ratio |
2.16x |
2.23x |
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2.38x |
2.44x |
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Other |
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Debt-to-Adjusted EBITDA at Quarter End (2) |
3.76x |
3.50x |
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Capital Investments (Excluding Acquisitions) (3) (4) |
$663 |
$715 |
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$1,226 |
$1,240 |
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(1) Schedules reconciling Adjusted Net Income, Adjusted EBITDA, Available Funds from Operations and Dividend Coverage Ratio (non-GAAP measures) to the most comparable GAAP measure are available at www.williams.com and as an attachment to this news release. |
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(2) Does not represent leverage ratios measured for WMB credit agreement compliance or leverage ratios as calculated by the major credit ratings agencies. Debt is net of cash on hand, and Adjusted EBITDA reflects the sum of the last four quarters. |
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(3) Capital Investments include increases to property, plant, and equipment (growth & maintenance capital), purchases of and contributions to equity-method investments and purchases of other long-term investments. |
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(4) Year-to-date 2024 capital excludes $1.844 billion for the acquisition of the Gulf Coast Storage assets, which closed in January 2024. Year-to-date 2023 capital excludes $1.053 billion for the acquisition of MountainWest, which closed in February 2023.
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GAAP Measures
Second-quarter 2024 net income decreased by $146 million compared to the prior year reflecting an unfavorable change of $214 million in net unrealized gains/losses on commodity derivatives, higher net interest expense from recent debt issuances and retirements, as well as higher operating costs, depreciation and interest expense resulting from recent acquisitions. These unfavorable changes were partially offset by a $89 million increase in service revenues driven by acquisitions and expansion projects, as well as higher equity allowance for funds used during construction (equity AFUDC) associated with ongoing capital projects at our regulated natural gas pipelines. The tax provision decreased primarily due to lower pretax income.
Year-to-date 2024 net income decreased by $441 million compared to the prior year reflecting an unfavorable change of $633 million in net unrealized gains/losses on commodity derivatives, higher net interest expense from recent debt issuances and retirements, lower realized hedge gains in the West, as well as higher operating costs, depreciation and interest expense resulting from recent acquisitions. These unfavorable changes were partially offset by a $300 million increase in service revenues driven by acquisitions and expansion projects, higher commodity margins, and higher equity AFUDC. The tax provision decreased primarily due to lower pretax income.
Second-quarter and year-to-date 2024 cash flow from operations decreased compared to the prior year primarily due to unfavorable net changes in both working capital and derivative collateral requirements, partially offset by higher operating results exclusive of non-cash items.
Non-GAAP Measures
Second-quarter 2024 Adjusted EBITDA increased by $56 million over the prior year, driven by the previously described favorable net contributions from acquisitions and expansion projects. Year-to-date 2024 Adjusted EBITDA increased by $195 million over the prior year, similarly reflecting favorable net contributions from acquisitions and expansion projects, as well as higher commodity margins.
Second-quarter and year-to-date 2024 Adjusted Net Income improved by $6 million and $41 million, respectively, over the prior year, driven by the previously described impacts to net income, adjusted primarily to remove the effects of net unrealized gains/losses on commodity derivatives and the related income tax effects.
Second-quarter and year-to-date Available Funds From Operations (AFFO) increased by $35 million and $97 million, respectively, compared to the prior year primarily due to higher results from continuing operations exclusive of non-cash items.
Business Segment Results & Form 10-Q
IBF4
