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Williams (WMB) Q1 Earnings Miss, Revenues Beat Estimates

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North American energy firm Williams Companies Inc. (WMB - Free Report) reported adjusted earnings from continuing operations of 14 cents per share missing the Zacks Consensus Estimate of 20 cents on increased costs.  

However, the bottom line improved from the prior-year figure of 3 cents per share. The improved results were driven by higher revenues, absence of impairment costs and growth in operating income from both its segments.

For the quarter ended Mar 31, 2017, Williams reported revenues of $1,988 million, surpassing the Zacks Consensus Estimate of $1,978 million and also improving from the year-ago quarter level of $1,660 million. 

Segmental Analysis

In Sep 2016, Williams announced major changes for a simplified, leaner business model and implemented the changes effective Jan 1. As a result of the realignment and the sale of Canadian operations, Williams NGL & Petchem Services reporting segment has been eliminated.

Williams Partners: This segment reported adjusted operating profit of $1,117million, up 5.3% from $1,060 million in the year-ago quarter. The upside was primarily driven by increased revenues, higher commodity prices, lower operating and selling costs. Increased contributions from expansion projects in Gulf of Mexico and Transco contributed to the results.

Other: The segment posted adjusted operating profit of $28 million compared with the year-ago quarter loss of $4 million. Results were driven by higher income associated with a regulatory asset primarily driven by our increased ownership in William Partners LP .

Expenses Summary

The total cost and expenses increased 11.2% to $1,555 in the reported quarter as against $1,398 in the prior-year quarter. The increase was mainly driven by higher product costs which escalated 82% compared to the prior-year quarter.

However, reduction in the operating and maintenance costs (O&M) and Selling, General and Administrative Expenses (S, G&A) partially offset the increase in the total costs. The O&M expenses in the reported quarter were $368 million as against $391 million in the year-ago quarter. The S, G&A expenses decreased to $161 million from the prior-year figure of $221 million.

Capital Expenditure & Balance Sheet

During the reported quarter, Williams' capital expenditure was $511 million. As of Mar 31, 2016, the company had cash and cash equivalents of 639 million. The long-term debt of the company was $21,825 million, representing a debt-to-capitalization ratio of 72.1%.

Williams Companies, Inc. (The) Price, Consensus and EPS Surprise

Zacks Rank & Key Picks

Based in Tulsa, Williams is a premier energy infrastructure provider in North America. The company’s core operations include finding, producing, gathering, processing, and transportation of natural gas. Boasting a widespread pipeline system, Williams is one of the largest domestic transporters of natural gas by volume. The company under Zacks categorized Oil and gas Production & Pipelines currently carries a zacks Rank #3 (Hold). 

Better-ranked players in the broader energy space include Bellatrix Exploration Ltd and Penn Virginia Corporation . Both companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bellatrix reported positive earnings surprise of 58.54% in the trailing four quarters.

Penn Virginia posted positive average earnings surprise of 36.67% in the preceding four quarters.

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