- 1Q 2016 Adjusted EBITDA is $1.056
Billion, up 15%
- WPZ Fee-Based Revenues up 5%; Represent
93% of Total Gross Margins
- 1Q Startup of Williams’ Second Offgas
Processing Plant Advances Unique Position in Canada
- Williams’ Board Unanimously Committed
to Enforcing Its Rights Under the Merger Agreement Entered into
with ETE on Sept. 28, 2015 and to Delivering Benefits of Merger
Agreement to WMB Stockholders
Williams (NYSE: WMB) today announced first quarter 2016 adjusted
EBITDA of $1.056 billion, a $138 million, or 15 percent, increase
from first quarter 2015. The increase was driven primarily by
Williams Partners’ adjusted EBITDA, which increased $143 million
for the quarter.
Williams Summary Financial Information
1Q Amounts in millions, except per-share amounts. Per share
amounts are reported on a diluted basis. All amounts are
attributable to The Williams Companies, Inc. 2016
2015 (Unaudited) Adjusted EBITDA (1) $1,056 $918
Adjusted income (1) $26 $122 Adjusted income per share (1)
$0.03 $0.16 Cash Available for Dividends (1) $429 $495
Dividend Coverage Ratio (1) 0.89 1.14 Net income (loss) ($65
) $70 Net income per share (loss) ($0.09 ) $0.09
(1) Schedules reconciling adjusted EBITDA, adjusted income, cash
available for dividends and dividend coverage ratio (non-GAAP
measures) are available at www.williams.com and as an attachment to
this news release.
Williams reported first quarter 2016 adjusted income of $26
million, or $0.03 per share, compared with $122 million, or $0.16
per share, in first quarter 2015. The decrease is primarily due to
higher interest expense and a lower allocation of net income to
Williams associated with an IDR waiver from the termination of the
Williams Partners merger agreement. Higher olefins margins from the
Geismar plant and higher equity earnings from Discovery’s Keathley
Canyon Connector partially offset the decrease.
Williams reported unaudited first quarter 2016 net loss
attributable to Williams of $65 million, or $(0.09) per share,
compared with net income of $70 million, or $0.09 per share on a
diluted basis, for first quarter 2015. The unfavorable change in
net income was driven primarily by the items noted previously, as
well as $112 million of pre-tax impairment charges associated with
certain equity-method investments and $34 million in project
development expenses in first quarter 2016 related to the propane
dehydrogenation project in Canada.
CEO Comment
Alan Armstrong, Williams’ president and chief executive officer,
made the following comments:
“Our strategy to connect North America’s abundant natural gas
supply to the best markets continues to deliver results and gain
momentum as we capture increasing opportunities on the demand side.
This marks the fourth consecutive quarter of adjusted EBITDA in
excess of $1 billion. Our focus on fee-based revenues has allowed
us to produce strong cash flow growth despite a 16-year low in NGL
prices.
“To help offset the effects of low commodity prices and slower
near-term growth among producers, we continue to aggressively
manage our costs and we made additional cost cutting decisions at
the end of the first quarter, including reducing our workforce by
10 percent.
“Importantly this year, we won new business in the Gulf of
Mexico, placed into service our second offgas plant in Canada and
achieved significant milestones on a number of demand-driven
natural gas projects. For the balance of 2016, we expect additional
cash flow from recently completed expansions and new projects
coming into service in the second and third quarters. Our fully
contracted natural gas transmission business coming on in 2017 and
2018 will drive growth in the supply basins we serve.”
Business Segment Results
Williams’ business segments for financial reporting are Williams
Partners, Williams NGL & Petchem Services and Other.
Williams NGL & Petchem Services segment includes an offgas
processing plant in Canada at CNLR’s Horizon upgrader that went
into service in first quarter 2016. The segment also includes a
propane dehydrogenation facility growth project under development
as well as petchem pipeline projects on the Gulf Coast.
Williams Adjusted EBITDA
1Q Amounts in millions
2016 2015
Williams Partners $ 1,060 $ 917 Williams NGL &
Petchem (14 ) (5 ) Other 10 6
Total
$ 1,056
$ 918
Schedules reconciling adjusted EBITDA to modified EBITDA and net
income (loss) are attached to this news release.
Williams Partners Segment
Williams Partners is focused on natural gas and natural gas
liquids (NGL) transportation, gathering, treating, processing and
storage; NGL fractionation; olefins production; and crude oil
transportation.
Williams Partners reported first quarter 2016 adjusted EBITDA of
$1.06 billion, a $143 million, or 16 percent, increase from first
quarter 2015. The increase was driven by $60 million in higher
olefins margins from a full quarter of Geismar plant production and
$63 million in fee-based revenue growth. Proportional adjusted
EBITDA from equity investments increased $45 million due primarily
to contributions from Discovery’s Keathley Canyon Connector project
in the Atlantic-Gulf operating area. Lower NGL margins were mostly
offset by lower operating costs.
Williams Partners’ complete financial results for first quarter
2016 are provided in the earnings news release issued today by
Williams Partners.
Proposed Merger of Energy Transfer Equity and
Williams
The Williams Board is unanimously committed to enforcing its
rights under the merger agreement entered into with ETE on
September 28, 2015 and to delivering the benefits of the merger
agreement to Williams’ stockholders. Williams is committed to
mailing the proxy statement, holding the stockholder vote and
closing the transaction as soon as possible.
First Quarter Materials to be Posted Shortly, Conference Call
Scheduled for Tomorrow
Williams’ and Williams Partners’ first quarter 2016 financial
results will be posted shortly at www.williams.com. The information
will include the data book and analyst package.
The company and the partnership plan to jointly host a
conference call and live webcast on Thursday, May 5, at 10 a.m.
EDT. A limited number of phone lines will be available at (800)
344-6698. International callers should dial (785) 830-7979. The
conference ID is 9742588.
A link to the webcast, as well as replays of the webcast in both
streaming and downloadable podcast formats, will be available
following the event at www.williams.com.
Form 10-Q
The company plans to file its first quarter 2016 Form 10-Q with
the Securities and Exchange Commission this week. Once filed, the
document will be available on both the SEC and Williams
websites.
Definitions of Non-GAAP Measures
This news release may include certain financial measures –
adjusted EBITDA, adjusted income (“earnings”), adjusted earnings
per share, cash available for dividends, and dividend coverage
ratio – that are non-GAAP financial measures as defined under the
rules of the Securities and Exchange Commission.
Our segment performance measure, modified EBITDA, is defined as
net income (loss) before income (loss) from discontinued
operations, income tax expense, net interest expense, equity
earnings from equity-method investments, other net investing
income, impairments of equity investments and goodwill,
depreciation and amortization expense, and accretion expense
associated with asset retirement obligations for nonregulated
operations. We also add our proportional ownership share (based on
ownership interest) of modified EBITDA of equity-method
investments.
Adjusted EBITDA further excludes items of income or loss that we
characterize as unrepresentative of our ongoing operations and may
include assumed business interruption insurance related to the
Geismar plant. Management believes these measures provide investors
meaningful insight into results from ongoing operations.
Cash available for dividends is defined as cash received from
our ownership in MLPs, cash received (used) by the Williams NGL
& Petchem Services segment (other than cash for capital
expenditures) less interest, taxes and maintenance capital
expenditures associated with Williams and not the underlying MLPs.
We also calculate the ratio of cash available for dividends to the
total cash dividends paid (dividend coverage ratio). This measure
reflects our cash available for dividends relative to actual cash
dividends paid.
This news release is accompanied by a reconciliation of these
non-GAAP financial measures to their nearest GAAP financial
measures. Management uses these financial measures because they are
accepted financial indicators used by investors to compare company
performance. In addition, management believes that these measures
provide investors an enhanced perspective of the operating
performance of the Company’s assets and the cash that the business
is generating.
Neither adjusted EBITDA, adjusted income, or cash available for
dividends are intended to represent cash flows for the period, nor
are they presented as an alternative to net income or cash flow
from operations. They should not be considered in isolation or as
substitutes for a measure of performance prepared in accordance
with United States generally accepted accounting principles.
About Williams
Williams (NYSE: WMB) is a premier provider of large-scale
infrastructure connecting North American natural gas and natural
gas products to growing demand for cleaner fuel and feedstocks.
Headquartered in Tulsa, Okla., Williams owns approximately 60
percent of Williams Partners L.P. (NYSE: WPZ), including all of the
2 percent general-partner interest. Williams Partners is an
industry-leading, large-cap master limited partnership with
operations across the natural gas value chain from gathering,
processing and interstate transportation of natural gas and natural
gas liquids to petchem production of ethylene, propylene and other
olefins. With major positions in top U.S. supply basins and also in
Canada, Williams Partners owns and operates more than 33,000 miles
of pipelines system wide – including the nation’s largest volume
and fastest growing pipeline – providing natural gas for
clean-power generation, heating and industrial use. Williams
Partners’ operations touch approximately 30 percent of U.S. natural
gas. www.williams.com
Forward-Looking Statements
The reports, filings, and other public announcements of The
Williams Companies, Inc. (Williams) and Williams Partners L.P.
(WPZ) may contain or incorporate by reference statements that do
not directly or exclusively relate to historical facts. Such
statements are “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements relate to anticipated
financial performance, management’s plans and objectives for future
operations, business prospects, outcome of regulatory proceedings,
market conditions and other matters. We make these forward-looking
statements in reliance on the safe harbor protections provided
under the Private Securities Litigation Reform Act of 1995.
All statements, other than statements of historical facts,
included in this document that address activities, events or
developments that we expect, believe or anticipate will exist or
may occur in the future, are forward-looking statements.
Forward-looking statements can be identified by various forms of
words such as “anticipates,” “believes,” “seeks,” “could,” “may,”
“should,” “continues,” “estimates,” “expects,” “forecasts,”
“intends,” “might,” “goals,” “objectives,” “targets,” “planned,”
“potential,” “projects,” “scheduled,” “will,” “assumes,”
“guidance,” “outlook,” “in service date” or other similar
expressions. These forward-looking statements are based on
management’s beliefs and assumptions and on information currently
available to management and include, among others, statements
regarding:
- The status, expected timing and
expected outcome of the proposed merger between Williams and Energy
Transfer Corp LP (ETC Merger);
- Statements regarding the proposed ETC
Merger;
- Our beliefs relating to value creation
as a result of the proposed ETC Merger;
- Benefits and synergies of the proposed
ETC Merger;
- Future opportunities for the combined
company;
- Other statements regarding Williams’
and Energy Transfer Equity, L.P. and its affiliates’ (collectively,
Energy Transfer) future beliefs, expectations, plans, intentions,
financial condition or performance;
- Events which may occur subsequent to
the proposed ETC Merger including events which directly impact
WPZ’s business;
- Expected levels of cash distributions
by WPZ with respect to general partner interests, incentive
distribution rights and limited partner interests;
- Levels of dividends to Williams
stockholders;
- Future credit ratings of Williams, WPZ
and their affiliates;
- Amounts and nature of future capital
expenditures;
- Expansion and growth of our business
and operations;
- Financial condition and liquidity;
- Business strategy;
- Cash flow from operations or results of
operations;
- Seasonality of certain business
components;
- Natural gas, natural gas liquids, and
olefins prices, supply, and demand; and
- Demand for our services.
Forward-looking statements are based on numerous assumptions,
uncertainties and risks that could cause future events or results
to be materially different from those stated or implied in this
document. Many of the factors that will determine these results are
beyond our ability to control or predict. Specific factors that
could cause actual results to differ from results contemplated by
the forward-looking statements include, among others, the
following:
- Satisfaction of the conditions to the
completion of the proposed ETC Merger, including receipt of the
approval of Williams’ stockholders;
- The timing and likelihood of completion
of the proposed ETC Merger, including the timing, receipt and terms
and conditions of any required governmental and regulatory
approvals for the proposed merger that could reduce anticipated
benefits or cause the parties to abandon the proposed
transaction;
- Energy Transfer’s plans for WPZ, as
well as the other master limited partnerships it currently
controls, following the completion of the proposed ETC Merger;
- The possibility that the expected
synergies and value creation from the proposed ETC Merger will not
be realized or will not be realized within the expected time
period;
- The risk that the businesses of
Williams and Energy Transfer will not be integrated
successfully;
- Disruption from the proposed ETC Merger
making it more difficult to maintain business and operational
relationships;
- The risk that unexpected costs will be
incurred in connection with the proposed ETC Merger;
- The possibility that the proposed ETC
Merger does not close, including due to the failure to satisfy the
closing conditions;
- Whether WPZ will produce sufficient
cash flows to provide the level of cash distributions we
expect;
- Whether Williams is able to pay current
and expected levels of dividends;
- Availability of supplies, market demand
and volatility of prices;
- Inflation, interest rates, fluctuation
in foreign exchange rates and general economic conditions
(including future disruptions and volatility in the global credit
markets and the impact of these events on customers and
suppliers);
- The strength and financial resources of
our competitors and the effects of competition;
- Whether we are able to successfully
identify, evaluate and execute investment opportunities;
- Our ability to acquire new businesses
and assets and successfully integrate those operations and assets
into our existing businesses as well as successfully expand our
facilities;
- Development of alternative energy
sources;
- The impact of operational and
developmental hazards and unforeseen interruptions;
- Costs of, changes in, or the results of
laws, government regulations (including safety and environmental
regulations), environmental liabilities, litigation, and rate
proceedings;
- Williams’ costs and funding obligations
for defined benefit pension plans and other postretirement benefit
plans;
- WPZ’s allocated costs for defined
benefit pension plans and other postretirement benefit plans
sponsored by its affiliates;
- Changes in maintenance and construction
costs;
- Changes in the current geopolitical
situation;
- Our exposure to the credit risk of our
customers and counterparties;
- Risks related to financing, including
restrictions stemming from debt agreements, future changes in
credit ratings as determined by nationally-recognized credit rating
agencies and the availability and cost of capital;
- The amount of cash distributions from
and capital requirements of our investments and joint ventures in
which we participate;
- Risks associated with weather and
natural phenomena, including climate conditions;
- Acts of terrorism, including
cybersecurity threats and related disruptions; and
- Additional risks described in our
filings with the Securities and Exchange Commission (SEC).
Given the uncertainties and risk factors that could cause our
actual results to differ materially from those contained in any
forward-looking statement, we caution investors not to unduly rely
on our forward-looking statements. We disclaim any obligations to
and do not intend to update the above list or announce publicly the
result of any revisions to any of the forward-looking statements to
reflect future events or developments.
In addition to causing our actual results to differ, the factors
listed above and referred to below may cause our intentions to
change from those statements of intention set forth in this
document. Such changes in our intentions may also cause our results
to differ. We may change our intentions, at any time and without
notice, based upon changes in such factors, our assumptions, or
otherwise.
Because forward-looking statements involve risks and
uncertainties, we caution that there are important factors, in
addition to those listed above, that may cause actual results to
differ materially from those contained in the forward-looking
statements. For a detailed discussion of those factors, see
Part I, Item 1A. Risk Factors in Williams’ and WPZ’s Annual Reports
on Form 10-K filed with the SEC on February 26, 2016 and in
Part II, Item 1A. Risk Factors in our Quarterly Reports on Form
10-Q available from our offices or from our website
at www.williams.com.
Reconciliation of Income (Loss) Attributable to
The Williams Companies, Inc. to Adjusted Income (UNAUDITED)
2015 2016
(Dollars in millions, except per-share amounts) 1st
Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st
Qtr
Income (loss)
attributable to The Williams Companies, Inc. available to common
stockholders $ 70 $ 114 $ (40 )
$ (715 ) $ (571 ) $ (65 )
Income (loss) -
diluted earnings (loss) per common share $ .09 $
.15 $ (.05 ) $ (.95 ) $ (.76 ) $ (.09 )
Adjustments:
Williams
Partners
Estimated minimum volume commitments $ 55 $ 55 $ 65 $ (175 ) $ — $
60 Severance and related costs — — — — — 25 Potential rate refunds
associated with rate case litigation — — — — — 15 Impairment of
certain assets 3 24 2 116 145 — ACMP Merger and transition-related
expenses 32 14 2 2 50 5 Share of impairment at equity-method
investments 8 1 17 7 33 — Geismar Incident adjustment for insurance
and timing — (126 ) — — (126 ) — Loss related to Geismar Incident 1
1 — — 2 — Loss (recovery) related to Opal incident 1 — (8 ) 1 (6 )
— Gain on extinguishment of debt — (14 ) — — (14 ) — Expenses
associated with strategic alternatives —
— 1 1
2 — Total Williams Partners
adjustments 100 (45 ) 79 (48 ) 86 105
Williams NGL &
Petchem Services
Canadian PDH facility project development costs — — — — — 34 Gain
on sale of certain assets — — — — — (10 ) Impairment of certain
assets — — —
64 64 —
Total Williams NGL & Petchem Services adjustments — — —
64 64 24
Other
Expenses associated with strategic alternatives — 7 18 5 30 6 Other
ACMP Merger and transition-related expenses 6 9 7 12 34 2 Severance
and related costs — — — — — 1 Contingency gain — — — (9 ) (9 ) —
Accrued long-term charitable commitment —
— — 8
8 — Total Other adjustments
6 16 25
16 63 9
Adjustments included in Modified EBITDA 106 (29 ) 104 32 213 138
Adjustments below
Modified EBITDA
Impairment of equity-method investments - Williams Partners — — 461
898 1,359 112 Impairment of goodwill - Williams Partners — — —
1,098 1,098 — Interest expense related to potential rate refunds
associated with rate case litigation - Williams Partners — — — — —
3 Accelerated depreciation related to reduced salvage value of
certain assets - Williams Partners — — — 7 7 — ACMP
Acquisition-related financing expenses - Williams Partners 2 — — —
2 — Interest income on receivable from sale of Venezuela assets -
Other — (9 ) (18 ) — (27 ) (18 ) Allocation of adjustments to
noncontrolling interests (33 ) 21
(212 ) (767 ) (991 )
(83 ) (31 ) 12 231 1,236 1,448 14
Total adjustments
75 (17 ) 335 1,268 1,661 152 Less tax effect for above items (28 )
4 (129 ) (473 ) (626 ) (61 ) Adjustments for tax-related items (1)
5 9 1 (74 ) (59 ) —
Adjusted income available to common
stockholders $ 122 $ 110 $ 167
$ 6 $ 405 $ 26
Adjusted diluted earnings per common share $ .16
$ .15 $ .22 $ .01
$ .54 $ .03
Weighted-average shares - diluted
(thousands) 752,028 752,775 753,100 751,930 752,460 751,040
(1) The fourth quarter of 2015 includes an
unfavorable adjustment related to the translation of certain
foreign-denominated unrecognized tax benefits. Note: The sum
of earnings per share for the quarters may not equal the total
earnings per share for the year due to changes in the
weighted-average number of common shares outstanding.
Reconciliation of Non-GAAP “Modified EBITDA” to Non-GAAP
“Adjusted EBITDA” (UNAUDITED)
2015 2016 (Dollars in millions)
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Year 1st Qtr
Net income (loss) $ 13 $ 183 $ (173 ) $ (1,337
) $ (1,314 ) $ (13 ) Provision (benefit) for income taxes 30 83 (65
) (447 ) (399 ) 2 Interest expense 251 262 263 268 1,044 291 Equity
(earnings) losses (51 ) (93 ) (92 ) (99 ) (335 ) (97 ) Impairment
of equity-method investments — — 461 898 1,359 112 Other investing
(income) loss - net — (9 ) (18 ) — (27 ) (18 ) Proportional
Modified EBITDA of equity-method investments 136 183 185 195 699
189 Impairment of goodwill — — — 1,098 1,098 — Depreciation and
amortization expenses 427 428 432 451 1,738 445 Accretion for asset
retirement obligations associated with nonregulated operations
6 9 6
7 28 7
Modified EBITDA $ 812 $
1,046 $ 999
$ 1,034 $ 3,891
$ 918 Williams Partners $ 817 $ 1,053 $
1,021 $ 1,112 $ 4,003 $ 955 Williams NGL & Petchem Services (5
) (3 ) (5 ) (70 ) (83 ) (38 ) Other —
(4 ) (17 ) (8 ) (29 )
1
Total Modified EBITDA $ 812
$ 1,046 $
999 $ 1,034
$ 3,891 $ 918
Adjustments included in Modified EBITDA: Williams
Partners $ 100 $ (45 ) $ 79 $ (48 ) $ 86 $ 105 Williams NGL &
Petchem Services — — — 64 64 24 Other 6
16 25 16
63 9
Total Adjustments included in
Modified EBITDA $ 106 $
(29 ) $ 104
$ 32 $ 213
$ 138 Adjusted EBITDA:
Williams Partners $ 917 $ 1,008 $ 1,100 $ 1,064 $ 4,089 $ 1,060
Williams NGL & Petchem Services (5 ) (3 ) (5 ) (6 ) (19 ) (14 )
Other 6 12 8
8 34 10
Total Adjusted EBITDA $ 918
$ 1,017 $ 1,103
$ 1,066 $
4,104 $ 1,056
Dividend Coverage Ratio (UNAUDITED)
2015 2016 (Dollars in millions,
except per share amounts) 1st Qtr 2nd Qtr
3rd Qtr 4th Qtr Year 1st Qtr
Distributions from WPZ (accrued / “as
declared” basis) (3) $ 515 $ 513 $ 513
$ 513 $ 2,054 $ 513
Williams NGL & Petchem Services adjusted cash flow (see below)
(5 ) (3 ) (5 ) (6 ) (19 ) (14 ) Corporate interest (64 )
(64 ) (63 ) (64 )
(255 ) (66 ) Subtotal 446 446 445 443 1,780 433 WMB
cash tax rate -12 % 0 % 0 % 0 % -3 % 0 % WMB cash taxes (excludes
cash taxes paid by WPZ) (1) 55 — — — 55 2 Corporate Capex (6
) (5 ) (6 ) (7 )
(24 ) (6 ) WMB cash flow available for dividends $
495 $ 441 $ 439 $ 436 $ 1,811 $ 429 - per share $ 0.66 $ 0.59 $
0.59 $ 0.58 $ 2.42 $ 0.57 WMB dividends paid (434 )
(442 ) (480 ) (480 )
(1,836 ) (480 ) Excess cash flow available after
dividends $ 61 $ (1 ) $ (41 ) $ (44 ) $ (25 ) $ (51 )
Dividend per share $ 0.5800 $ 0.5900 $ 0.6400 $ 0.6400 $ 2.4500 $
0.6400 Coverage ratio (2)(3) 1.14 1.00 0.91 0.91 0.99 0.89
Williams NGL &
Petchem Services Adjusted Cash Flow:
Modified EBITDA (5 ) (3 ) (5 ) (70 ) (83 ) (38 ) Segment
adjustments — — —
64 64 24
Adjusted EBITDA (5 ) (3 ) (5 ) (6 ) (19 ) (14 ) Less:
Maintenance Capex — —
— — —
— Adjusted cash flow (5 ) (3 ) (5 ) (6 ) (19 ) (14 )
Notes: (1) A refund was received in the first quarter
of 2015 related to a 2014 tax Net Operating Loss, due to bonus
depreciation, that yielded a carryback refund from 2012. (2)
WMB cash flow available for dividends / WMB dividends paid.
(3) Cash distributions for the third and fourth quarters of 2015
and the first quarter of 2016 have been increased by $209 million,
$209 million, and $10 million, respectively, in order to exclude
the impact of the IDR waiver associated with the WPZ merger
termination fee from the determination of coverage ratios.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160504006595/en/
WilliamsMedia Contact:Tom Droege,
918-573-4034orInvestor Contacts:John Porter,
918-573-0797orBrett Krieg, 918-573-4614
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