The Williams Companies, Inc. (WMB - Free Report) reported third-quarter 2020 adjusted earnings per share of 27 cents, meeting the Zacks Consensus Estimate, attributable to a strong contribution from the Northeast G&P unit. The bottom line was, however, partially offset by weak results from the Transmission & Gulf of Mexico segment.Nonetheless, the bottom line improved 3.85% from the year-earlier quarter's adjusted earnings of 26 cents.
The energy infrastructure provider’s quarterly revenues of $1.93 billion outpaced the Zacks Consensus Estimate by 9.40% but decreased from the year-ago figure of $2 billion.
Key Takeaways
Distributable cash flows came in at $772 million, down 6.1% from the year-ago number of $822 million. Adjusted EBITDA was $1.26 billion in the quarter under review, marginally lower than the year-ago quarter’s figure of $1.27 billion. Cash flow from operations totaled $452 million compared with $858 million in the prior-year period.
Segmental Analysis
Transmission & Gulf of Mexico: Consisting of Williams’ Transco Pipeline and assets in the Gulf Coast area, the segment generated adjusted EBITDA of $622 million, down 8.5% from $680 million in the year-ago quarter. This underperformance was caused by depressed service revenues from lower non-cash deferred revenue amortization at Gulfstar One. Apart from declining revenues, a number of temporary production shut-ins induced by hurricane 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 $245 million, marginally higher than the year-earlier figure of $244 million. Soft revenues in Barnett Shale affected the result, which was partially offset by minimized 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 adjusted EBITDA of $396 million, up 15.5% from the prior-year quarter’s $343 million, led by record gathering and processing volumes. Expanded volumes from the new Northeast JV along with added ownership in Utica East Ohio Midstream also boosted results. Moreover, cost-minimizing efforts aided segmental profitability.
Costs, Capex & Balance Sheet
In the reported quarter, total costs and expenses decreased to $1.29 billion from $1.37 billion a year ago owing to fall in product expenses and G&A costs.
Williams’ total capital expenditure was $938 million in the third quarter, down substantially from $1.7 billion a year ago.
As of Sep 30, 2020, the company had cash and cash equivalents worth $70 million and a long-term debt of $21.95 billion with a debt-to-capitalization of 64.5%.
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 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 Oasis Petroleum Inc , Antero Resources Corporation (AR - Free Report) and Earthstone Energy, Inc. , 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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The Williams Companies, Inc. (WMB - Free Report) reported third-quarter 2020 adjusted earnings per share of 27 cents, meeting the Zacks Consensus Estimate, attributable to a strong contribution from the Northeast G&P unit. The bottom line was, however, partially offset by weak results from the Transmission & Gulf of Mexico segment.Nonetheless, the bottom line improved 3.85% from the year-earlier quarter's adjusted earnings of 26 cents.
The energy infrastructure provider’s quarterly revenues of $1.93 billion outpaced the Zacks Consensus Estimate by 9.40% but decreased from the year-ago figure of $2 billion.
Key Takeaways
Distributable cash flows came in at $772 million, down 6.1% from the year-ago number of $822 million. Adjusted EBITDA was $1.26 billion in the quarter under review, marginally lower than the year-ago quarter’s figure of $1.27 billion. Cash flow from operations totaled $452 million compared with $858 million in the prior-year period.
Segmental Analysis
Transmission & Gulf of Mexico: Consisting of Williams’ Transco Pipeline and assets in the Gulf Coast area, the segment generated adjusted EBITDA of $622 million, down 8.5% from $680 million in the year-ago quarter. This underperformance was caused by depressed service revenues from lower non-cash deferred revenue amortization at Gulfstar One. Apart from declining revenues, a number of temporary production shut-ins induced by hurricane 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 $245 million, marginally higher than the year-earlier figure of $244 million. Soft revenues in Barnett Shale affected the result, which was partially offset by minimized 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 adjusted EBITDA of $396 million, up 15.5% from the prior-year quarter’s $343 million, led by record gathering and processing volumes. Expanded volumes from the new Northeast JV along with added ownership in Utica East Ohio Midstream also boosted results. Moreover, cost-minimizing efforts aided segmental profitability.
Costs, Capex & Balance Sheet
In the reported quarter, total costs and expenses decreased to $1.29 billion from $1.37 billion a year ago owing to fall in product expenses and G&A costs.
Williams’ total capital expenditure was $938 million in the third quarter, down substantially from $1.7 billion a year ago.
As of Sep 30, 2020, the company had cash and cash equivalents worth $70 million and a long-term debt of $21.95 billion with a debt-to-capitalization of 64.5%.
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 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 Oasis Petroleum Inc , Antero Resources Corporation (AR - Free Report) and Earthstone Energy, Inc. , 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.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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