Williams (WMB) Q2 Earnings Top Estimates, Revenues Miss

Zacks Equity Research

Tue, Aug 4, 2020, 8:23 AM4 min read

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The Williams Companies, Inc. WMB reported second-quarter 2020 adjusted earnings per share of 25 cents, beating the Zacks Consensus Estimate of 23 cents, attributable to a strong contribution from the Northeast G&P unit. However, the bottom line marginally missed the year-earlier quarter's adjusted earnings of 26 cents due to weak contribution from the Transmission & Gulf of Mexico and West segments.

The energy infrastructure provider’s quarterly revenues of $1.78 billion also lagged the Zacks Consensus Estimate by 4.23% and decreased from the year-ago figure of $2.04 billion as well.

Distributable cash flows came in at $797 million, down 8.07% from the year-ago number of $867 million. Adjusted EBITDA was $1.24 billion in the quarter under review, in line with the year-ago quarter’s figure. Cash flow from operations totaled $1.14 billion compared with $1.07 billion in the prior-year period. Lower maintenance capital drove cash flow in the quarter.

Segmental Analysis

Transmission & Gulf of Mexico: Consisting of Williams’ Transco Pipeline and assets in the Gulf Coast area, the segment generated adjusted EBITDA of $617 million, down 1.75% from $628 million in the year-ago quarter. This underperformance was caused by depressed service revenues from lower deferred revenue amortization at Gulfstar One. Apart from declining revenues, a number of temporary production shut-ins across the Gulf of Mexico induced by oil prices, maintenance and Tropical Storm Cristobal hampered segment profitability.

West: This segment includes the Northwest pipeline and operations in various regions, such as Colorado, Mid-Continent and Haynesville Shale among others. It delivered adjusted EBITDA of $252 million, 12.2% lower than the year-earlier figure of $287 million. Soft revenues in Barnett Shale affected the results.

Northeast G&P: Engaged in natural gas gathering and processing along with the NGL fractionation business in Marcellus and Utica shale regions, the segment generated adjusted EBITDA of $363 million, up 13.8% from the prior-year quarter’s $319 million. Expanded volumes from the new Northeast JV along with added ownership in Utica East Ohio Midstream boosted results. Moreover, cost-minimizing efforts aided segmental profitability.

Williams Companies, Inc. The Price, Consensus and EPS Surprise

Williams Companies, Inc. The price-consensus-eps-surprise-chart | Williams Companies, Inc. The Quote

Costs, Capex & Balance Sheet

In the reported quarter, total costs and expenses decreased to $1.17 billion from $1.54 billion a year ago owing to fall in product expenses and G&A costs.

Williams’ total capital expenditure was $613 million in the second quarter, down substantially from $919 million a year ago. As of Jun 30, 2020, the company had cash and cash equivalents worth $1.13 billion and a long-term debt of $22.3 billion with a debt-to-capitalization of 64.6%.

2020 Guidance

The company anticipates full-year adjusted EBITDA in the lower end of its earlier guided range of $4.95-$5.25 billion. Growth capex view for the year is now expected in the $1-$1.2 billion band, lower than the earlier-issued $1.1-$1.3 billion range.

Zacks Rank & Key Picks

Williams currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy space are Halliburton Company HAL, Core Laboratories NV CLB and Pembina Pipeline Corp PBA, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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