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The Williams Companies (WMB) Up 3.1% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Williams Companies, Inc. (The) (WMB - Free Report) . Shares have added about 3.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is The Williams Companies due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Williams Companies’ Q3 Earnings Beat Estimates, Sales Rise Y/Y
The Williams Companies reported third-quarter 2024 adjusted earnings per share of 43 cents, which beat the Zacks Consensus Estimate of 42 cents. The Transmission & Gulf of Mexico and West segments delivered strong year-over-year results, leading to the outperformance. The bottom line decreased from the year-ago period’s level of 45 cents due to the weak year-over-year performance of the Northeast G&P Segment.
Tulsa, OK-based oil and gas storage and transportation company’s revenues of $2.7 billion beat the Zacks Consensus Estimate by $6 million. The reported figure increased from the year-ago quarter’s reported number of $2.6 billion. This outperformance was due to increased service revenues on a year-over-year basis.
In the quarter, Williams made significant progress with several key projects, including bringing Transco's Regional Energy Access into full service ahead of schedule on Aug. 1, completing the in-service placement of Mountain West’s Uinta Basin expansion and placing a portion of Transco’s Southside Reliability Enhancement in service.
The company also brought the Anchor facility online, completed construction on Whale in the Deepwater Gulf of Mexico, began construction on Transco’s Commonwealth Energy Connector and secured favorable rulings to start the Louisiana Energy Gateway project. Additionally, WMB started construction on two solar projects in the Northeast and signed commercial agreements with a Florida utility to fully participate in the large-scale Lakeland Solar project.
Further expanding its infrastructure, the company received the Federal Energy Regulatory Commission (FERC) certificate for the Mountain West Overthrust Westbound expansion and filed for FERC approval on Transco's 1.6 billion cubic feet per day Southeast Supply Enhancement project. The company executed agreements for the Dalton Lateral Expansion II on Transco and three new expansions on Northwest Pipeline, adding a total of 260 million cubic feet per day of firm capacity.
Key Takeaways
Adjusted EBITDA totaled $1.7 billion in the quarter under review, which was up 3% year over year. This was driven by positive net contributions from acquisitions and expansion projects.
Cash flow from operations amounted to $1.2 billion, which was up 0.7 % from the corresponding quarter of 2023.
Segmental Analysis
Transmission & Gulf of Mexico: The segment reported an adjusted EBITDA of $830 million, up 10.1% from the year-ago quarter’s level. This was driven by transmission expansions and the acquisition of Gulf Coast Storage.
West: This segment focuses on the gathering and processing of assets in the Western United States. Adjusted EBITDA for this segment totaled $330 million, up 4.8% from the prior-year quarter’s level of $315 million.This strong performance was largely driven by the DJ Basin acquisitions, higher OPPL volumes and a boost in NGL services.
Northeast G&P: This segment registered an adjusted EBITDA of $484 million, down 0.2% from $485 million in the year-earlier quarter. The slight decrease in adjusted EBITDA was due to modest reductions in gathering volumes.
Gas & NGL Marketing Services: The unit reported an adjusted EBITDA of $4 million, a decrease from $16 million from the prior-year quarter. This was due to lower dry-gas marketing margins.
Costs, Capex & Balance Sheet
In the reported quarter, total costs and expenses of $1.8 billion increased almost 16% from the year-ago quarter’s figure.
Total capital expenditure (CapEx) was $1.8 billion. As of Sept. 30, 2024, the company had cash and cash equivalents of $762 million and a long-term debt of $24.8 billion, with a debt-to-capitalization of 62.5%.
Guidance
Williams anticipates Adjusted EBITDA in the upper half of its 2024 guided range of $6.8 billion to $7.1 billion. The company also maintains its 2024 expectations for growth capex between $1.45 billion and $1.75 billion and maintenance capex ranging from $1.1 billion to $1.3 billion, which includes $350 million allocated for emissions reduction and modernization initiatives.
Looking ahead to 2025, Williams expects Adjusted EBITDA to be between $7.2 billion and $7.6 billion, with growth capex of $1.65 billion to $1.95 billion and maintenance capex of $750 million to $850 million, including $100 million at the midpoint for emissions reduction and modernization efforts. The company also projects a leverage ratio midpoint of 3.85x for 2024 and has increased its annual dividend by 6.1%, from $1.79 in 2023 to $1.90.
The company also expects its leverage ratio for 2024 to settle at a midpoint of 3.80x and plans to raise its dividend by 6.1%, increasing the figure to $1.90 per share for 2024, up from $1.79 in 2023.
Strategic Divestiture & Gulf of Mexico Acquisition
The Oklahoma-based energy infrastructure provider has taken steps to strengthen its financial position and focus on the company’s core operations. WMB divested its 14% stake in a joint venture with Aux Sable for $160 million. This non-operating venture, which includes a processing and fractionation facility in Illinois and a gas gathering pipeline in North Dakota, exposed Williams to volatile cash flows due to commodity price fluctuations.
Simultaneously, the company acquired Phillips 66's 40% stake in the Discovery pipeline system in the Gulf of Mexico for $170 million, achieving full ownership of the pipeline. This acquisition also includes PSX's Dauphin Island Gathering Partners system.
These strategic moves are aimed at reducing WMB's exposure to commodity price volatility and enhancing the profitability of its growing Gulf of Mexico assets.
Guidance
Williams anticipates Adjusted EBITDA in the upper half of its 2024 guided range of $6.8 billion to $7.1 billion. The company also maintains its 2024 expectations for growth capex between $1.45 billion and $1.75 billion and maintenance capex ranging from $1.1 billion to $1.3 billion, which includes $350 million allocated for emissions reduction and modernization initiatives.
Looking ahead to 2025, Williams expects Adjusted EBITDA to be between $7.2 billion and $7.6 billion, with growth capex of $1.65 billion to $1.95 billion and maintenance capex of $750 million to $850 million, including $100 million at the midpoint for emissions reduction and modernization efforts. The company also projects a leverage ratio midpoint of 3.85x for 2024 and has increased its annual dividend by 6.1%, from $1.79 in 2023 to $1.90.
Strategic Divestiture & Gulf of Mexico Acquisition
The Oklahoma-based energy infrastructure provider has taken steps to strengthen its financial position and focus on the company’s core operations. WMB divested its 14% stake in a joint venture with Aux Sable for $160 million. This non-operating venture, which includes a processing and fractionation facility in Illinois and a gas gathering pipeline in North Dakota, exposed Williams to volatile cash flows due to commodity price fluctuations.
Simultaneously, the company acquired Phillips 66's 40% stake in the Discovery pipeline system in the Gulf of Mexico for $170 million, achieving full ownership of the pipeline. This acquisition also includes PSX's Dauphin Island Gathering Partners system.
These strategic moves are aimed at reducing WMB's exposure to commodity price volatility and enhancing the profitability of its growing Gulf of Mexico assets.
Guidance
Williams anticipates Adjusted EBITDA in the upper half of its 2024 guided range of $6.8 billion to $7.1 billion. The company also maintains its 2024 expectations for growth capex between $1.45 billion and $1.75 billion and maintenance capex ranging from $1.1 billion to $1.3 billion, which includes $350 million allocated for emissions reduction and modernization initiatives.
Looking ahead to 2025, Williams expects Adjusted EBITDA to be between $7.2 billion and $7.6 billion, with growth capex of $1.65 billion to $1.95 billion and maintenance capex of $750 million to $850 million, including $100 million at the midpoint for emissions reduction and modernization efforts. The company also projects a leverage ratio midpoint of 3.85x for 2024 and has increased its annual dividend by 6.1%, from $1.79 in 2023 to $1.90.
The Oklahoma-based energy infrastructure provider has taken steps to strengthen its financial position and focus on the company’s core operations. WMB divested its 14% stake in a joint venture with Aux Sable for $160 million. This non-operating venture, which includes a processing and fractionation facility in Illinois and a gas gathering pipeline in North Dakota, exposed Williams to volatile cash flows due to commodity price fluctuations.
Simultaneously, the company acquired Phillips 66's 40% stake in the Discovery pipeline system in the Gulf of Mexico for $170 million, achieving full ownership of the pipeline. This acquisition also includes PSX's Dauphin Island Gathering Partners system.
These strategic moves are aimed at reducing WMB's exposure to commodity price volatility and enhancing the profitability of its growing Gulf of Mexico assets.
The Oklahoma-based energy infrastructure provider has taken steps to strengthen its financial position and focus on the company’s core operations. WMB divested its 14% stake in a joint venture with Aux Sable for $160 million. This non-operating venture, which includes a processing and fractionation facility in Illinois and a gas gathering pipeline in North Dakota, exposed Williams to volatile cash flows due to commodity price fluctuations.
Simultaneously, the company acquired Phillips 66's 40% stake in the Discovery pipeline system in the Gulf of Mexico for $170 million, achieving full ownership of the pipeline. This acquisition also includes PSX's Dauphin Island Gathering Partners system.
These strategic moves are aimed at reducing WMB's exposure to commodity price volatility and enhancing the profitability of its growing Gulf of Mexico assets.
The Oklahoma-based energy infrastructure provider has taken steps to strengthen its financial position and focus on the company’s core operations. WMB divested its 14% stake in a joint venture with Aux Sable for $160 million. This non-operating venture, which includes a processing and fractionation facility in Illinois and a gas gathering pipeline in North Dakota, exposed Williams to volatile cash flows due to commodity price fluctuations.
Simultaneously, the company acquired Phillips 66's 40% stake in the Discovery pipeline system in the Gulf of Mexico for $170 million, achieving full ownership of the pipeline. This acquisition also includes PSX's Dauphin Island Gathering Partners system.
These strategic moves are aimed at reducing WMB's exposure to commodity price volatility and enhancing the profitability of its growing Gulf of Mexico assets.
The Oklahoma-based energy infrastructure provider has taken steps to strengthen its financial position and focus on the company’s core operations. WMB divested its 14% stake in a joint venture with Aux Sable for $160 million. This non-operating venture, which includes a processing and fractionation facility in Illinois and a gas gathering pipeline in North Dakota, exposed Williams to volatile cash flows due to commodity price fluctuations.
Simultaneously, the company acquired Phillips 66's 40% stake in the Discovery pipeline system in the Gulf of Mexico for $170 million, achieving full ownership of the pipeline. This acquisition also includes PSX's Dauphin Island Gathering Partners system.
These strategic moves are aimed at reducing WMB's exposure to commodity price volatility and enhancing the profitability of its growing Gulf of Mexico assets.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -14.88% due to these changes.
VGM Scores
Currently, The Williams Companies has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, The Williams Companies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
The Williams Companies is part of the Zacks Oil and Gas - Production and Pipelines industry. Over the past month, Enbridge (ENB - Free Report) , a stock from the same industry, has gained 3.5%. The company reported its results for the quarter ended September 2024 more than a month ago.
Enbridge reported revenues of $10.91 billion in the last reported quarter, representing a year-over-year change of +48.7%. EPS of $0.40 for the same period compares with $0.46 a year ago.
For the current quarter, Enbridge is expected to post earnings of $0.52 per share, indicating a change of +10.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -1% over the last 30 days.
Enbridge has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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The Williams Companies (WMB) Up 3.1% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Williams Companies, Inc. (The) (WMB - Free Report) . Shares have added about 3.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is The Williams Companies due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Williams Companies’ Q3 Earnings Beat Estimates, Sales Rise Y/Y
The Williams Companies reported third-quarter 2024 adjusted earnings per share of 43 cents, which beat the Zacks Consensus Estimate of 42 cents. The Transmission & Gulf of Mexico and West segments delivered strong year-over-year results, leading to the outperformance. The bottom line decreased from the year-ago period’s level of 45 cents due to the weak year-over-year performance of the Northeast G&P Segment.
Tulsa, OK-based oil and gas storage and transportation company’s revenues of $2.7 billion beat the Zacks Consensus Estimate by $6 million. The reported figure increased from the year-ago quarter’s reported number of $2.6 billion. This outperformance was due to increased service revenues on a year-over-year basis.
In the quarter, Williams made significant progress with several key projects, including bringing Transco's Regional Energy Access into full service ahead of schedule on Aug. 1, completing the in-service placement of Mountain West’s Uinta Basin expansion and placing a portion of Transco’s Southside Reliability Enhancement in service.
The company also brought the Anchor facility online, completed construction on Whale in the Deepwater Gulf of Mexico, began construction on Transco’s Commonwealth Energy Connector and secured favorable rulings to start the Louisiana Energy Gateway project. Additionally, WMB started construction on two solar projects in the Northeast and signed commercial agreements with a Florida utility to fully participate in the large-scale Lakeland Solar project.
Further expanding its infrastructure, the company received the Federal Energy Regulatory Commission (FERC) certificate for the Mountain West Overthrust Westbound expansion and filed for FERC approval on Transco's 1.6 billion cubic feet per day Southeast Supply Enhancement project. The company executed agreements for the Dalton Lateral Expansion II on Transco and three new expansions on Northwest Pipeline, adding a total of 260 million cubic feet per day of firm capacity.
Key Takeaways
Adjusted EBITDA totaled $1.7 billion in the quarter under review, which was up 3% year over year. This was driven by positive net contributions from acquisitions and expansion projects.
Cash flow from operations amounted to $1.2 billion, which was up 0.7 % from the corresponding quarter of 2023.
Segmental Analysis
Transmission & Gulf of Mexico: The segment reported an adjusted EBITDA of $830 million, up 10.1% from the year-ago quarter’s level. This was driven by transmission expansions and the acquisition of Gulf Coast Storage.
West: This segment focuses on the gathering and processing of assets in the Western United States. Adjusted EBITDA for this segment totaled $330 million, up 4.8% from the prior-year quarter’s level of $315 million.This strong performance was largely driven by the DJ Basin acquisitions, higher OPPL volumes and a boost in NGL services.
Northeast G&P: This segment registered an adjusted EBITDA of $484 million, down 0.2% from $485 million in the year-earlier quarter. The slight decrease in adjusted EBITDA was due to modest reductions in gathering volumes.
Gas & NGL Marketing Services: The unit reported an adjusted EBITDA of $4 million, a decrease from $16 million from the prior-year quarter. This was due to lower dry-gas marketing margins.
Costs, Capex & Balance Sheet
In the reported quarter, total costs and expenses of $1.8 billion increased almost 16% from the year-ago quarter’s figure.
Total capital expenditure (CapEx) was $1.8 billion. As of Sept. 30, 2024, the company had cash and cash equivalents of $762 million and a long-term debt of $24.8 billion, with a debt-to-capitalization of 62.5%.
Guidance
Williams anticipates Adjusted EBITDA in the upper half of its 2024 guided range of $6.8 billion to $7.1 billion. The company also maintains its 2024 expectations for growth capex between $1.45 billion and $1.75 billion and maintenance capex ranging from $1.1 billion to $1.3 billion, which includes $350 million allocated for emissions reduction and modernization initiatives.
Looking ahead to 2025, Williams expects Adjusted EBITDA to be between $7.2 billion and $7.6 billion, with growth capex of $1.65 billion to $1.95 billion and maintenance capex of $750 million to $850 million, including $100 million at the midpoint for emissions reduction and modernization efforts. The company also projects a leverage ratio midpoint of 3.85x for 2024 and has increased its annual dividend by 6.1%, from $1.79 in 2023 to $1.90.
The company also expects its leverage ratio for 2024 to settle at a midpoint of 3.80x and plans to raise its dividend by 6.1%, increasing the figure to $1.90 per share for 2024, up from $1.79 in 2023.
Strategic Divestiture & Gulf of Mexico Acquisition
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -14.88% due to these changes.
VGM Scores
Currently, The Williams Companies has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, The Williams Companies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
The Williams Companies is part of the Zacks Oil and Gas - Production and Pipelines industry. Over the past month, Enbridge (ENB - Free Report) , a stock from the same industry, has gained 3.5%. The company reported its results for the quarter ended September 2024 more than a month ago.
Enbridge reported revenues of $10.91 billion in the last reported quarter, representing a year-over-year change of +48.7%. EPS of $0.40 for the same period compares with $0.46 a year ago.
For the current quarter, Enbridge is expected to post earnings of $0.52 per share, indicating a change of +10.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -1% over the last 30 days.
Enbridge has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.