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Williams' (WMB) Shares Barely Move Since Q2 Earnings Beat

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The Williams Companies, Inc. (WMB - Free Report) shares have gone up by a mere 0.9% since its second-quarter earnings announcement on Aug 1.

This slight rise, however, could be attributed to the Oklahoma-based energy infrastructure provider posting earnings for the reported quarter that outperformed the consensus mark.

Behind the Earnings Headlines

The Williams Companies reported second-quarter 2022 adjusted earnings per share of 40 cents, beating the Zacks Consensus Estimate of 37 cents and surpassing the year-earlier period’s profit of 27 cents per share.

The outperformance was due to higher-than-expected contributions from a couple of segments. Adjusted EBITDA from the Others segment totaled $92 million, ahead of the Zacks Consensus Estimate of $81 million. Adjusted EBITDA increased year over year by 28.1% in the West unit.

Meanwhile, in the quarter ended Jun 30, Williams’ revenues of $2.49 billion missed the Zacks Consensus Estimate of $3 billion but outperformed the last year’s second-quarter revenues of $2.28 billion, which could be attributed to increased product sales.

Key Takeaways

Adjusted EBITDA was $1.49 billion in the quarter under review, reflecting an increase of 13.6% from the corresponding period of 2021. Cash flow from operations totaled $1.09 billion, up 3.8% from the prior-year period.

Segmental Analysis

Transmission & Gulf of Mexico: Comprising WMB’s massive Transco pipeline system and Northwest Pipeline, the segment generated adjusted EBITDA of $652 million, rising only 0.6% from the year-ago quarter. This unit’s performance was largely driven by higher service revenues, primarily at Transco, largely from the Leidy South expansion project.

West: This segment includes the gathering and processing assets in the Western region of the United States. It delivered adjusted EBITDA of $296 million, 32.7% higher than the $223 million recorded in the year-earlier quarter. The improvement in results was primarily due to the Trace Midstream acquisition, which closed on Apr 29, as well as higher commodity-based rates and higher Haynesville gathering volumes.

Northeast G&P: Engaged in natural gas gathering and processing, along with the NGL fractionation business in the Marcellus and Utica shale regions, the segment generated adjusted EBITDA of $450 million, up almost 10% from the prior-year quarter’s $409 million. This uptick was driven by top-line Gathering and Processing revenue growth on slightly higher volumes. The G&P rate growth was supported by a combination of factors, including higher commodity-based rates, annual fee escalations and other expansion-related fee increases.

Gas & NGL Marketing Services: This unit generated adjusted EBITDA of $6 million, down 25% from the prior-year quarter’s $8 million.  The result of this segment was impacted by higher commodity margins, more than offset by the absence of a favorable impact in 2021 from Winter Storm Uri and higher administrative costs associated with the Sequent business acquired in July 2021.

Costs, Capex & Balance Sheet

In the reported quarter, total costs and expenses of $2.01 billion rose by almost 20% compared with the year-ago quarter’s figure of $1.68 billion.

Williams’ total capital expenditure was $1.36 billion in the second quarter, up from $460 million a year ago. As of Jun 30, 2022, the company had cash and cash equivalents of $133 million and a long-term debt of $20.8 billion, with a debt-to-capitalization of almost 65%.

2022 Guidance

WMB raised its full-year adjusted EBITDA guidance and now expects 2022 adjusted EBITDA in the range of $6.1 billion-$6.4 billion, a $450-million midpoint increase from the earlier guidance range of $5.9-$6.2 billion, with growth capital spending still anticipated in the range of $2.25 billion-$2.35 billion. Further, Williams expects to achieve a leverage ratio midpoint of 3.6X, lower than the original guidance of 3.8X.

The company maintained its maintenance capital expenditure guidance between $650 million and $750 million, including the capital for emissions reduction and modernization initiatives.

Zacks Rank

Williams currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Snapshot of a Few Energy Players

TotalEnergies SE (TTE - Free Report) reported second-quarter 2022 operating earnings of $3.75 per share, meeting the Zacks Consensus Estimate. The improvement was due to an increase in commodity prices.

In the second quarter of 2022, TotalEnergies acquired $2,464 million worth of assets and sold assets valued at $388 million. TTE bought back shares worth $2 billion in the second quarter. TotalEnergies expects to invest $16 billion in 2022, out of which 25% will be allocated to further strengthen renewable operations and electricity.

Shell plc (SHEL - Free Report) reported second-quarter earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) of $3.06. The bottom line beat the Zacks Consensus Estimate of $2.91 due to stronger commodity prices and refining margins.

Shell has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. The company currently has a Zacks Style Score of A for Value, Growth and Momentum. SHEL is expected to see earnings growth of 130.5% in 2022.

Chevron Corporation (CVX - Free Report) reported adjusted second-quarter earnings per share of $5.82, beating the Zacks Consensus Estimate of $5.02. The outperformance was driven by robust commodity prices and product margins, which propelled both CVX’s segments to record better-than-expected bottom-line results.

As of Jun 30, Chevron had $12 billion in cash and cash equivalents and total debt of $26.2 billion, with a debt-to-total capitalization of 14.6%. Further, CVX paid out $2.8 billion in dividends and bought back $2.5 billion worth of shares in the second quarter.

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