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Williams (WMB) Q1 Earnings & Revenues Outpace Estimates
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The Williams Companies (WMB - Free Report) reported first-quarter 2023 adjusted earnings of 56 cents per share, which beat the Zacks Consensus Estimate of 46 cents. The bottom line also outdid the year-ago period’s reported figure of 41 cents. The outperformance was due to higher-than-expected contributions from one major segment — Northeast G&P. Adjusted EBITDA from the segment totaled $470 million, which outpaced the Zacks Consensus Estimate of $453 million. The figure also increased 12.4% on a year-over-year basis.
Williams’ revenues of $3.1 billion in the reported quarter beat the Zacks Consensus Estimate of $2.8 billion. The top line also outperformed the year-ago quarter’s figure of $2.5 billion, which could be attributed to increased revenues from service.
Williams Companies, Inc. (The) Price, Consensus and EPS Surprise
Adjusted EBITDA was $1.79 billion in the quarter under review, an increase of 18.5% from the prior-year period. Cash flow from operations totaled $1.51 billion, up 39.8% from that recorded in the corresponding quarter of 2022.
Segmental Analysis
Transmission & Gulf of Mexico: The segment reported adjusted EBITDA of $728 million, up 4.4% from the year-ago quarter. This was largely driven by much higher service revenues from Transco’s recent in-service Leidy South expansion project.
West: This segment registered an adjusted EBITDA of $286 million, 10% higher than $260 million recorded in the year-earlier quarter. The improvement resulted from contributions from Trace Midstream and the benefits of realized gains on natural gas hedges.
Northeast G&P: Adjusted EBITDA for this segment was $470 million, up 12.4% from the prior-year quarter’s $418 million. This uptick can be attributed to higher volumes at Ohio Valley Midstream, Marcellus South and Cardinal.
Gas & NGL Marketing Services: This unit generated an adjusted EBITDA of 231 million compared with $65 million in the year-ago quarter. The upside reflects higher commodity marketing margins and a $390-million net favorable change in unrealized gains/losses on commodity derivatives.
Costs, Capex & Balance Sheet
Total costs and expenses amounted to $1.72 billion in the reported quarter.
Total capital expenditure was $525 million compared with $316 million a year ago. As of Mar 31, 2023, the company had cash and cash equivalents of $477 million, and a long-term debt of $22.79 billion, with a debt-to-capitalization of 61.4%.
Guidance
WMB expects its full-year adjusted EBITDA to be $6.4-$6.8 billion. Growth capital spending is anticipated to be $1.6-$1.9 billion. Williams expects to achieve a leverage ratio mid-point of 3.65. This, along with the scope of generating a positive free cash flow after dividends and capital expenditure (excluding the Trace acquisition of approximately $950 million), offers financial flexibility. The dividend guidance for 2023 increased 5.3% on an annualized basis to $1.79 from $1.70 in 2022.
Zacks Rank and Key Picks
Currently, Williams carries a Zacks Rank #3 (Hold).
EPM is worth $219.16 million. The company currently pays investors $0.48 per share, or 7.38%, on an annual basis.
Evolution Petroleum currently has a forward P/E ratio of 6.07. In comparison, its industry has an average forward P/E of 7.50, which means that EPM is trading at a discount to the group.
AROC is valued at $1.55 billion. The company delivered an average earnings surprise of 26.27% for the last four quarters and its current dividend yield is 6.06%.
Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.
RNGR is valued at $183.61 million. In the past year, its shares have gained 13.8%.
Ranger Energy Services currently has a forward P/E ratio of 5.30. In comparison, its industry has an average forward P/E of 11.60, which means that RNGR is trading at a discount to the group.
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Williams (WMB) Q1 Earnings & Revenues Outpace Estimates
The Williams Companies (WMB - Free Report) reported first-quarter 2023 adjusted earnings of 56 cents per share, which beat the Zacks Consensus Estimate of 46 cents. The bottom line also outdid the year-ago period’s reported figure of 41 cents. The outperformance was due to higher-than-expected contributions from one major segment — Northeast G&P. Adjusted EBITDA from the segment totaled $470 million, which outpaced the Zacks Consensus Estimate of $453 million. The figure also increased 12.4% on a year-over-year basis.
Williams’ revenues of $3.1 billion in the reported quarter beat the Zacks Consensus Estimate of $2.8 billion. The top line also outperformed the year-ago quarter’s figure of $2.5 billion, which could be attributed to increased revenues from service.
Williams Companies, Inc. (The) Price, Consensus and EPS Surprise
Williams Companies, Inc. (The) price-consensus-eps-surprise-chart | Williams Companies, Inc. (The) Quote
Key Takeaways
Adjusted EBITDA was $1.79 billion in the quarter under review, an increase of 18.5% from the prior-year period. Cash flow from operations totaled $1.51 billion, up 39.8% from that recorded in the corresponding quarter of 2022.
Segmental Analysis
Transmission & Gulf of Mexico: The segment reported adjusted EBITDA of $728 million, up 4.4% from the year-ago quarter. This was largely driven by much higher service revenues from Transco’s recent in-service Leidy South expansion project.
West: This segment registered an adjusted EBITDA of $286 million, 10% higher than $260 million recorded in the year-earlier quarter. The improvement resulted from contributions from Trace Midstream and the benefits of realized gains on natural gas hedges.
Northeast G&P: Adjusted EBITDA for this segment was $470 million, up 12.4% from the prior-year quarter’s $418 million. This uptick can be attributed to higher volumes at Ohio Valley Midstream, Marcellus South and Cardinal.
Gas & NGL Marketing Services: This unit generated an adjusted EBITDA of 231 million compared with $65 million in the year-ago quarter. The upside reflects higher commodity marketing margins and a $390-million net favorable change in unrealized gains/losses on commodity derivatives.
Costs, Capex & Balance Sheet
Total costs and expenses amounted to $1.72 billion in the reported quarter.
Total capital expenditure was $525 million compared with $316 million a year ago. As of Mar 31, 2023, the company had cash and cash equivalents of $477 million, and a long-term debt of $22.79 billion, with a debt-to-capitalization of 61.4%.
Guidance
WMB expects its full-year adjusted EBITDA to be $6.4-$6.8 billion. Growth capital spending is anticipated to be $1.6-$1.9 billion. Williams expects to achieve a leverage ratio mid-point of 3.65. This, along with the scope of generating a positive free cash flow after dividends and capital expenditure (excluding the Trace acquisition of approximately $950 million), offers financial flexibility. The dividend guidance for 2023 increased 5.3% on an annualized basis to $1.79 from $1.70 in 2022.
Zacks Rank and Key Picks
Currently, Williams carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the energy sector are Evolution Petroleum (EPM - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Archrock (AROC - Free Report) and Murphy USA (MUSA - Free Report) , both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
EPM is worth $219.16 million. The company currently pays investors $0.48 per share, or 7.38%, on an annual basis.
Evolution Petroleum currently has a forward P/E ratio of 6.07. In comparison, its industry has an average forward P/E of 7.50, which means that EPM is trading at a discount to the group.
AROC is valued at $1.55 billion. The company delivered an average earnings surprise of 26.27% for the last four quarters and its current dividend yield is 6.06%.
Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.
RNGR is valued at $183.61 million. In the past year, its shares have gained 13.8%.
Ranger Energy Services currently has a forward P/E ratio of 5.30. In comparison, its industry has an average forward P/E of 11.60, which means that RNGR is trading at a discount to the group.