Williams Reports Second-Quarter 2019 Financial Results
Press Release
TULSA, Okla.—-Williams (NYSE: WMB) today announced its unaudited financial results for the three and six months ended June 30, 2019.
Strong 2Q 2019 Results Compared with 2Q 2018
- Net Income Attributable to Williams available to common stockholders of $310 million; up $175 million or 130%; Year-to-Date (“YTD”) up $217 million or 76%
- Net Income Per Share of $0.26; up 63%; Adjusted Income Per Share of $0.26; up 53%
- Cash Flow From Operations of $1.069 billion; up $178 million or 20%; YTD up $259 million or 16%
- Adjusted EBITDA of $1.241 billion; up $131 million or 12%; YTD up $212 million or 9%
- Distributable Cash Flow (“DCF”) of $867 million; up $230 million or 36%; YTD up $287 million or 21%
- Dividend Coverage Ratio is 1.88x
Improvement of Leverage Metrics Continues
- Completed formation of joint venture with Canada Pension Plan Investment Board (“CPPIB”); received $1.33 billion from CPPIB in exchange for 35% interest in new Northeast JV
- Completed sale of our 50% interest in Jackalope Gas Gathering Services, LLC to an affiliate of Crestwood Equity Partners L.P. for $485 million
- Debt (Net of Cash) to Adjusted EBITDA at Quarter End: 4.43x
Solid Execution Delivers Strong Results
- Northeast G&P segment up 19% in Modified EBITDA and 25% in Adjusted EBITDA 2Q 2019 vs. 2Q 2018
- Atlantic-Gulf segment up 10% in Modified EBITDA and 23% in Adjusted EBITDA 2Q 2019 vs. 2Q 2018
- Norphlet Deepwater-Gulf project placed in service; first gas delivery on June 22; increasing volumes at Mobile Bay processing facility
- Gathering volumes on operated assets up 11% 2Q 2019 vs. 2Q 2018
CEO Perspective
Alan Armstrong, president and chief executive officer, made the following comments:
“Strong demand for natural gas and the resiliency of our well-positioned business are clearly reflected in our second-quarter 2019 results. Compared to second-quarter 2018, our Cash Flow From Operations increased by 20% and Adjusted Income Per Share rose by 53%. Low gas prices will continue to incentivize demand growth, and demand for low cost power generation, LNG exports and new industrial loads will grow even faster in the second half of the year. So we expect this predictable cash flow growth to continue.
“We expect to maintain the momentum we’ve achieved in deleveraging as we continue our intense focus on the efficiency of our operations and lowering our costs. This disciplined approach ensures we deliver the most competitive cost structure in our space for our shareholders. We now see our 2019 leverage coming in better than expected at less than 4.5x versus our original guidance of less than 4.75x. That’s a tribute to crisp execution in operations, growth projects and value-adding transactions.”
Armstrong added, “This quarter also saw the delivery of our 2018 Sustainability Report. We recognize the important role natural gas plays in helping to address environmental concerns about air quality and climate change, while providing lower utility bills to consumers and industry. As our actions demonstrate, Williams is eager to do its part to help our country meet its climate goals with low carbon natural gas solutions that are ready now and keep jobs and industry here at home.”
| Williams Summary Financial Information |
2Q |
YTD |
||||
| Amounts in millions, except ratios and per-share amounts. Per share amounts are reported on a diluted basis. Net income (loss) amounts are attributable to The Williams Companies, Inc. available to common stockholders. |
2019 |
2018 |
2019 |
2018 |
||
| GAAP Measures | ||||||
| Net Income |
$310 |
$135 |
$504 |
$287 |
||
| Net Income Per Share |
$0.26 |
$0.16 |
$0.41 |
$0.35 |
||
| Cash Flow From Operations |
$1,069 |
$891 |
$1,844 |
$1,585 |
||
| Non-GAAP Measures (1) | ||||||
| Adjusted EBITDA |
$1,241 |
$1,110 |
$2,457 |
$2,245 |
||
| Adjusted Income |
$313 |
$143 |
$586 |
$302 |
||
| Adjusted Income Per Share |
$0.26 |
$0.17 |
$0.48 |
$0.36 |
||
| Distributable Cash Flow |
$867 |
$637 |
$1,647 |
$1,360 |
||
| Dividend Coverage Ratio |
1.88x |
1.44x |
1.79x |
1.54x |
||
| Other | ||||||
| Debt-to-Adjusted EBITDA at Quarter End (2) |
4.43x |
4.66x |
||||
| Capital Investments (3)(4) |
$702 |
$1,000 |
$1,219 |
$1,955 |
||
|
(1) |
Schedules reconciling adjusted income from continuing operations, adjusted EBITDA, Distributable Cash Flow and 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. |
|||||
|
(2) |
Debt-to-Adjusted EBITDA ratio 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. |
|||||
|
(3) |
Capital Investments includes increases to property, plant, and equipment, purchases of businesses, net of cash acquired, and purchases of and contributions to equity-method investments. |
|||||
|
(4) |
YTD 2019 excludes $727 million (net of cash acquired) for the purchase of the remaining 38% of UEO as this amount was provided for at the close of the new Northeast JV by our JV partners, CPPIB, in June 2019. |
|||||
GAAP Measures
- Second-quarter 2019 Net Income benefited from increased service revenues in the Atlantic-Gulf segment primarily from Transco expansion projects and in the Northeast G&P segment driven by growth in gathering volumes, partially offset by a decline in the West segment results due to lower commodity margins and the absence of the former Four Corners area business sold in fourth-quarter 2018. The current year benefited from a $122 million gain on the sale of our 50 percent interest in Jackalope, partially offset by the absence of a $62 million gain in the prior year associated with the deconsolidation of that Jackalope interest. Asset impairments in the current year were substantially offset by similar levels of impairments in the prior year. Second-quarter 2019 also includes $43 million of estimated employee severance and related costs. The estimated severance costs are primarily associated with a voluntary separation program announced in anticipation of our pending organizational realignment and considering our ongoing evaluation of cost structure. The current year also reflects higher interest expense associated with financing obligations for leased pipeline capacity and higher provision for income taxes driven by higher pre-tax income. Net Income also reflects less income attributable to noncontrolling interests driven by the WPZ merger in the third-quarter 2018.
- Year-to-date 2019 Net Income benefited from increased service revenues in the Atlantic-Gulf segment primarily from Transco expansion projects and in the Northeast G&P segment driven by growth in volumes, partially offset by a decline in West segment results due to lower commodity margins and the absence of the former Four Corners area business. Other drivers of the improvement are similar to those described for the second-quarter results, partially offset by a $74 million first-quarter 2019 impairment of an equity-method investment.
- The increase in Cash Flow From Operations for second-quarter and year-to-date 2019 periods was largely driven by the increased service revenues in the Atlantic-Gulf and Northeast G&P segments, the collection of Transco’s filed rates subject to refund, and the receipt of an income tax refund, partially offset by the decline in West segment results.
Non-GAAP Measures
- The increase in Adjusted EBITDA for second-quarter 2019 and year-to-date 2019 largely reflects the previously mentioned increased service revenues in the Atlantic-Gulf and Northeast G&P segments, partially offset by the decline in West segment results.
- Adjusted Income for both the quarter and year-to-date periods also improved, driven by the higher Adjusted EBITDA and less income attributable to noncontrolling interests, partially offset by higher interest expense and provision for income taxes.
- Second-quarter and year-to-date 2019 DCF are higher, reflecting the increased Adjusted EBITDA, an income tax refund received in 2019, and lower maintenance capital, partially offset by higher net interest expense.
Business Segment Results & Form 10-Q
Williams’ operations are comprised of the following reportable segments: Atlantic-Gulf, West, Northeast G&P and Other. For additional information, please see the company’s second-quarter 2019, Form 10-Q, which Williams expects to file this week, with the Securities and Exchange Commission (SEC). Once filed, the document will be on the SEC and Williams websites.
IBF4
