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Williams (WMB) Q3 Earnings and Sales Top Estimates, Rise Y/Y

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The Williams Companies, Inc. (WMB - Free Report) reported third-quarter 2021 adjusted earnings per share (EPS) of 34 cents, beating the Zacks Consensus Estimate of 28 cents and the year-ago bottom line of 27 cents. This outperformance can be attributed to impressive contributions from all the three segments of the company.

For the quarter ended Sep 30, revenues of $2.48 billion surpassed the Zacks Consensus Estimate by 6.42%. Moreover, the same increased from the year-ago figure of $1.93 billion.

Takeaways

Adjusted EBITDA was $1.420 billion in the quarter under review, reflecting an increase of 12% from the level in the corresponding period of 2020. Cash flow from operations totaled $834 million compared with $452 million in the prior-year period.

Segmental Analysis

Transmission & Gulf of Mexico: Comprising Williams’ massive Transco pipeline system and the Northwest Pipeline, the segment generated adjusted EBITDA of $630 million, higher than the year-ago quarter’s $622 million. Gains in service revenues, healthy commodity margins and higher equity-method investment contributions drove the results.

West: This segment includes gathering and processing assets in the Western region of the United States. It delivered an adjusted EBITDA of $293 million, which is 19.6% higher than $245 million recorded in the year-earlier quarter. Results were attributable to increased commodity margins and decreased operating and administrative expenses.

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 an adjusted EBITDA of $442 million, up 11.6% from the prior-year quarter’s $396 million. Increased gathering volumes and advantages of expanded ownership in Blue Racer Midstream boosted the results.

Costs, Capex & Balance Sheet

In the reported quarter, total costs and expenses increased 64.1% to $2.12 billion from $1.3 billion a year ago, primarily due to higher product expenses, operating and maintenance expenses as well as depreciation and amortization expenses.

Williams’ total capital expenditure was $272 million in the third quarter. As of Sep 30, 2021, the company had cash and cash equivalents worth $214 million and a long-term debt of $20.34 billion with a debt-to-capitalization of 64.5%.

2021 Guidance

The company projects full-year adjusted EBITDA in the range of $5.5-$5.55 billion. It reiterates its growth capital spending in the band of $1-$1.2 billion. It expects to generate a positive free cash flow, which will allow it to maintain its financial stability.

Zacks Rank & Key Picks

Williams currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Cheniere Energy (LNG - Free Report) , Diamondback Energy, Inc. (FANG - Free Report) and Continental Resources, Inc. , each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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