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Williams (WMB) Q4 Earnings and Sales Outpace Estimates
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Williams Companies, Inc. (WMB - Free Report) reported fourth-quarter 2023 adjusted earnings per share of 48 cents, which beat the Zacks Consensus Estimate of 47 cents. The outperformance was due to stronger-than-anticipated performance of the Transmission & Gulf of Mexico and Northeast G&P segments. However, the bottom line declined from the year-ago period’s level of 53 cents, due to lower-than-expected contributions from two major segments — Gas & NGL Marketing Services and West — during the reported quarter.
Williams’ revenues of $2.78 billion beat the Zacks Consensus Estimate of $2.76 billion. However, the top line decreased from the year-ago quarter’s reported figure of $2.93 billion due to lower product sales on a year-over-year basis.
Key Takeaways
Adjusted EBITDA totaled $1.72 billion in the quarter under review, down 3% year over year. Cash flow from operations amounted to $1.93 billion, up 58.2% from that recorded in the corresponding quarter of 2022.
Williams Companies, Inc. (The) Price, Consensus and EPS Surprise
Transmission & Gulf of Mexico: The segment reported an adjusted EBITDA of $752 billion, up 7.4% from the year-ago quarter’s level. This was largely driven by higher service revenues. Overall, the growth of Transmission & Gulf of Mexico was fueled by the advantages gained from the NorTex acquisition and expansion projects.
West: This segment focuses on the gathering and processing of assets in the Western United States. Adjusted EBITDA for this segment totaled $323 million, down 0.9% from the prior-year quarter’s level of $326 million. This underperformance can be attributed to lower NYMEX-based rates in the Barnett.
Northeast G&P: This segment registered an adjusted EBITDA of $485 million, up 4.5% from $464 million recorded in the year-earlier quarter. This uptick in performance can be attributed to higher rates and volumes generated by the Ohio Valley, Cardinal and Susquehanna operations.
Gas & NGL Marketing Services: This unit generated an adjusted EBITDA profit of $69 million, down from the prior-year quarter’s level of $149 million.
Costs, Capex & Balance Sheet
In the reported quarter, total costs and expenses of $1.7 billion declined almost 8.1% from the year-ago quarter’s figure of $1.85 billion.
Total capital expenditure was $788 million compared with $806 million a year ago. As of Dec 31, 2023, the company had cash and cash equivalents of $2.2 billion, and a long-term debt of $23.4 billion, with a debt-to-capitalization of 65.3%.
Guidance
In 2024, WMB expects Adjusted EBITDA in the $6.8-$7.1 billion range. Additionally, it anticipates growth capex between $1.45 billion and $1.75 billion and maintenance capex between $1.1 billion and $1.3 billion. This includes $350 million allocated for emission reduction and modernization initiatives. The company expects a leverage ratio midpoint of 3.85x for 2024. WMB also expects to increase its dividend by 6.1% on an annualized basis to $1.90 per share in 2024, up from $1.79 in 2023
Looking ahead to 2025, the company expects Adjusted EBITDA between $7.2 billion and $7.6 billion, with growth capex in the band of $1.65-$1.95 billion and maintenance capex in the range of $750-$850 million. This includes $100 million for emission reduction and modernization initiatives.
Subsea 7 is valued at $3.96 billion. The company currently pays a dividend of 38 cents per share, or 2.93%, on an annual basis.
SUBCY offers offshore project services for the energy industry, specializing in subsea field development, covering project management, design, engineering, procurement, fabrication, survey, installation and commissioning of seabed production facilities.
Energy Transfer is valued at $43.91 billion. The company currently pays a dividend of $1.26 per share, or 9.03%, on an annual basis.
ET is an independent energy company, principally engaged in the acquisition, exploration, development and production of crude oil and natural gas.
Murphy USA is valued at around $8.34 billion. In the past year, its shares have risen 47%.
MUSA is involved in the marketing of retail motor fuel products and convenience merchandise, operating retail stores under the brands Murphy USA, Murphy Express and QuickChek.
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Williams (WMB) Q4 Earnings and Sales Outpace Estimates
Williams Companies, Inc. (WMB - Free Report) reported fourth-quarter 2023 adjusted earnings per share of 48 cents, which beat the Zacks Consensus Estimate of 47 cents. The outperformance was due to stronger-than-anticipated performance of the Transmission & Gulf of Mexico and Northeast G&P segments. However, the bottom line declined from the year-ago period’s level of 53 cents, due to lower-than-expected contributions from two major segments — Gas & NGL Marketing Services and West — during the reported quarter.
Williams’ revenues of $2.78 billion beat the Zacks Consensus Estimate of $2.76 billion. However, the top line decreased from the year-ago quarter’s reported figure of $2.93 billion due to lower product sales on a year-over-year basis.
Key Takeaways
Adjusted EBITDA totaled $1.72 billion in the quarter under review, down 3% year over year. Cash flow from operations amounted to $1.93 billion, up 58.2% from that recorded in the corresponding quarter of 2022.
Williams Companies, Inc. (The) Price, Consensus and EPS Surprise
Williams Companies, Inc. (The) price-consensus-eps-surprise-chart | Williams Companies, Inc. (The) Quote
Segmental Analysis
Transmission & Gulf of Mexico: The segment reported an adjusted EBITDA of $752 billion, up 7.4% from the year-ago quarter’s level. This was largely driven by higher service revenues. Overall, the growth of Transmission & Gulf of Mexico was fueled by the advantages gained from the NorTex acquisition and expansion projects.
West: This segment focuses on the gathering and processing of assets in the Western United States. Adjusted EBITDA for this segment totaled $323 million, down 0.9% from the prior-year quarter’s level of $326 million. This underperformance can be attributed to lower NYMEX-based rates in the Barnett.
Northeast G&P: This segment registered an adjusted EBITDA of $485 million, up 4.5% from $464 million recorded in the year-earlier quarter. This uptick in performance can be attributed to higher rates and volumes generated by the Ohio Valley, Cardinal and Susquehanna operations.
Gas & NGL Marketing Services: This unit generated an adjusted EBITDA profit of $69 million, down from the prior-year quarter’s level of $149 million.
Costs, Capex & Balance Sheet
In the reported quarter, total costs and expenses of $1.7 billion declined almost 8.1% from the year-ago quarter’s figure of $1.85 billion.
Total capital expenditure was $788 million compared with $806 million a year ago. As of Dec 31, 2023, the company had cash and cash equivalents of $2.2 billion, and a long-term debt of $23.4 billion, with a debt-to-capitalization of 65.3%.
Guidance
In 2024, WMB expects Adjusted EBITDA in the $6.8-$7.1 billion range. Additionally, it anticipates growth capex between $1.45 billion and $1.75 billion and maintenance capex between $1.1 billion and $1.3 billion. This includes $350 million allocated for emission reduction and modernization initiatives. The company expects a leverage ratio midpoint of 3.85x for 2024. WMB also expects to increase its dividend by 6.1% on an annualized basis to $1.90 per share in 2024, up from $1.79 in 2023
Looking ahead to 2025, the company expects Adjusted EBITDA between $7.2 billion and $7.6 billion, with growth capex in the band of $1.65-$1.95 billion and maintenance capex in the range of $750-$850 million. This includes $100 million for emission reduction and modernization initiatives.
Zacks Rank and Key Picks
Currently, WMB carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like Subsea 7 S.A. (SUBCY - Free Report) and Energy Transfer LP (ET - Free Report) , both sporting a Zacks Rank #1 (Strong Buy), and Murphy USA Inc. (MUSA - Free Report) , carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Subsea 7 is valued at $3.96 billion. The company currently pays a dividend of 38 cents per share, or 2.93%, on an annual basis.
SUBCY offers offshore project services for the energy industry, specializing in subsea field development, covering project management, design, engineering, procurement, fabrication, survey, installation and commissioning of seabed production facilities.
Energy Transfer is valued at $43.91 billion. The company currently pays a dividend of $1.26 per share, or 9.03%, on an annual basis.
ET is an independent energy company, principally engaged in the acquisition, exploration, development and production of crude oil and natural gas.
Murphy USA is valued at around $8.34 billion. In the past year, its shares have risen 47%.
MUSA is involved in the marketing of retail motor fuel products and convenience merchandise, operating retail stores under the brands Murphy USA, Murphy Express and QuickChek.