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Williams Companies (WMB) Q2 Earnings and Sales Lag Estimates

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North American energy firm The Williams Companies, Inc. (WMB - Free Report) reported adjusted earnings from continuing operations of 13 cents per share missing the Zacks Consensus Estimate of 19 cents. Unfavorable changes in the income tax provision led to the weaker-than-expected results. Further, the bottom line also deteriorated from the prior-year figure of 19 cents per share. This was due to a favorable adjustment related to the reversal of a cumulative anticipatory foreign tax credit in the prior year quarter.

For the quarter ended Jun 30, 2017, Williams Companies reported revenues of $1,924 million, below the Zacks Consensus Estimate of $2,262 million. However, revenues increased from the year-ago quarter figure of $1,736 million thanks to higher contribution from Williams Partners L.P. (WPZ - Free Report) . Revenues of Williams Partners were higher by 10.2% to $1,919 million in the quarter.

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


Segmental Analysis

Williams Partners:This segment reported adjusted operating profit of $1,104 million, up 3.7% from $1,065 million in the year-ago quarter. Absence of $ 341 million of impairment charges and higher fee-based revenues drove results.

Other:The segment posted adjusted operating profit of $9 million compared with the year-ago breakeven level. Results were mainly driven by the absence of $406 million of impairment charges. The results were partially offset by unfavorable adjustments related to the income tax provision.

Expenses Summary

The total cost and expenses decreased 30.6% to $1,543 million in the reported quarter compared with $2,224 million in the prior-year quarter. Reduced costs were mainly driven by the $777 million decrease in the impairment charges. The decrease in impairments includes the absence of $747 million of impairments related to Canadian operations.

Further, operating and maintenance costs (O&M) and Selling, General and Administrative Expenses (S, G&A) and depreciation costs also declined in the reported quarter. However, the product costs rose to $537 million in the quarter compared with the prior-year quarter figure of $401 million.

Capital Expenditure & Balance Sheet

During the reported quarter, Williams Companies’ capital expenditure was $545 million. As of Jun 30, 2017, the company had cash and cash equivalents of 1,198 million, as against $135 million in the year ago quarter. Long-term debt of the company was $21,325 million, representing a debt-to-capitalization ratio of 71.9%.

Zacks Rank & Key Picks

Based in Tulsa, Williams Companies 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 Companies is one of the largest domestic transporters of natural gas by volume. The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space include TransCanada Corporation (TRP - Free Report) and Braskem S.A. (BAK - Free Report) . Both these companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

TransCanada delivered positive average earnings surprise of 4.06% in the preceding four quarters.

Braskem posted positive average earnings surprise of 107.79% in the trailing four quarters.

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