The Williams Companies, Inc. (WMB - Free Report) reported second-quarter 2021 adjusted earnings per share (EPS) of 27 cents, meeting the Zacks Consensus Estimate. Reported earnings were higher than the year-ago bottom line of 25 cents per share.
The latest bottom-line result can be attributed to higher-than-expected contributions from its two segments. Adjusted EBITDA from the West and the Northeast G&P units totaled $231 million and $409 million each, ahead of their respective Zacks Consensus Estimate of $228 million and $402 million.
However, the results were partially offset by lower-than-anticipated contribution from the Transmission & Gulf of Mexico segment. Adjusted EBITDA from the segment summed $648 million, falling short of the Zacks Consensus Estimate of $669 million.
For the quarter ended Jun 30, the company’s revenues of $2.28 billion missed the Zacks Consensus Estimate by 9.87%. However, the same increased from the year-ago figure of $1.78 billion.
Takeaways
Adjusted EBITDA was $1.432 billion in the quarter under review, reflecting an increase of 6% from the level in the corresponding period of 2020. Cash flow from operations totaled $1.06 billion compared with $1.14 billion 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 $648 million, higher than the year-ago quarter’s $617 million. Gains in service revenues, healthy commodity margins and higher natural gas transmission service revenues related to recent expansion projects 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 $231 million, which is 8.33% lower than $252 million recorded in the year-earlier quarter. Results were impacted by reduced service revenues, indicating slashed gathering volumes, lower Barnett deferred revenue amortization and the absence of a deficiency fee.
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 $409 million, up 12.7% from the prior-year quarter’s $363 million. Increased gathering volumes on its Bradford and Marcellus South systems, and higher equity-method investment contributions boosted the results.
Costs, Capex & Balance Sheet
In the reported quarter, total costs and expenses increased 44% to $1.68 billion from $1.17 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 $460 million in the second quarter, up from $363 million a year ago. As of Jun 30, 2021, the company had cash and cash equivalents worth $1.2 billion and a long-term debt of $21.1 billion with a debt-to-capitalization of 64.7%.
2021 Guidance
The company projects full-year adjusted EBITDA at the upper end of the previously raised guided range of $5.2-$5.4 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 Matador Resources Company (MTDR - Free Report) , Devon Energy Corporation (DVN - 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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The Williams Companies, Inc. (WMB - Free Report) reported second-quarter 2021 adjusted earnings per share (EPS) of 27 cents, meeting the Zacks Consensus Estimate. Reported earnings were higher than the year-ago bottom line of 25 cents per share.
The latest bottom-line result can be attributed to higher-than-expected contributions from its two segments. Adjusted EBITDA from the West and the Northeast G&P units totaled $231 million and $409 million each, ahead of their respective Zacks Consensus Estimate of $228 million and $402 million.
However, the results were partially offset by lower-than-anticipated contribution from the Transmission & Gulf of Mexico segment. Adjusted EBITDA from the segment summed $648 million, falling short of the Zacks Consensus Estimate of $669 million.
For the quarter ended Jun 30, the company’s revenues of $2.28 billion missed the Zacks Consensus Estimate by 9.87%. However, the same increased from the year-ago figure of $1.78 billion.
Takeaways
Adjusted EBITDA was $1.432 billion in the quarter under review, reflecting an increase of 6% from the level in the corresponding period of 2020. Cash flow from operations totaled $1.06 billion compared with $1.14 billion 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 $648 million, higher than the year-ago quarter’s $617 million. Gains in service revenues, healthy commodity margins and higher natural gas transmission service revenues related to recent expansion projects 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 $231 million, which is 8.33% lower than $252 million recorded in the year-earlier quarter. Results were impacted by reduced service revenues, indicating slashed gathering volumes, lower Barnett deferred revenue amortization and the absence of a deficiency fee.
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 $409 million, up 12.7% from the prior-year quarter’s $363 million. Increased gathering volumes on its Bradford and Marcellus South systems, and higher equity-method investment contributions boosted the results.
Costs, Capex & Balance Sheet
In the reported quarter, total costs and expenses increased 44% to $1.68 billion from $1.17 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 $460 million in the second quarter, up from $363 million a year ago. As of Jun 30, 2021, the company had cash and cash equivalents worth $1.2 billion and a long-term debt of $21.1 billion with a debt-to-capitalization of 64.7%.
2021 Guidance
The company projects full-year adjusted EBITDA at the upper end of the previously raised guided range of $5.2-$5.4 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 Matador Resources Company (MTDR - Free Report) , Devon Energy Corporation (DVN - 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.
Free Report – The Bitcoin Profit Phenomenon
Zacks Investment Research has released a Special Report to help you pursue massive profits from the world’s first and largest decentralized form of money.
No guarantees for the future, but in the past three presidential election years, Bitcoin’s returns were as follows: 2012 +272.4%, 2016 +161.1%, and 2020 +302.8%.
Zacks predicts another significant surge. Click below for Bitcoin: A Tumultuous Yet Resilient History.
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