- 4Q 2016 Cash Flow from Operations of
$1.597 billion, Up $1.034 billion Including Barnett Contract
Restructure
- Full-Year 2016 Adjusted EBITDA of
$4.427 billion, Up 8.3% vs. 2015
- Increased Fee-Based Revenues and
Lowered Expenses for Full-Year 2016 as Additional Assets were
Placed Into Service
- Full-Year 2016 DCF of $2.970 billion,
Up $151 million, or 5.4% vs. 2015
- Financial Repositioning Strengthens
Distribution Coverage, Enhances Credit Profile, Improves Cost of
Capital, Removes Need to Access Public Equity Markets, Boosts
Growth Outlook
Williams Partners L.P. (NYSE: WPZ) today announced its financial
results for the three and 12 months ended Dec. 31, 2016.
Summary Financial Information 4Q
Full Year Amounts in millions, except per-unit
amounts. Per unit amounts are reported on a diluted basis. All
amounts are attributable to Williams Partners L.P. 2016
2015 2016 2015
(Unaudited) GAAP Measures Cash Flow from Operations $1,597
$563 $3,938 $2,661 Net income (loss) $145 ($1,644) $431 ($1,449)
Net income (loss) per common unit $0.24 ($2.68) ($0.17) ($3.27)
Non-GAAP Measures (1) Adjusted EBITDA $1,113 $1,064 $4,427
$4,089 DCF attributable to partnership operations
$699
$718 $2,970 $2,819 Cash distribution coverage ratio
.92x
.99x
1.01x
.97x
(1) Adjusted EBITDA, distributable cash flow (DCF) and cash
distribution coverage ratio are non-GAAP measures. Reconciliations
to the most relevant measures included in GAAP are attached to this
news release.
Fourth-Quarter and Full-Year 2016 Financial Results
Williams Partners reported unaudited fourth-quarter 2016 net
income attributable to controlling interests of $145 million, a
$1.789 billion improvement over the fourth-quarter 2015. The
favorable change was driven by the absence of a $1.1 billion
impairment of goodwill and $580 million of lower impairments of
equity-method investments. The improvement also reflected lower
operating and maintenance (O&M) and selling, general and
administrative (SG&A) expenses.
For the year, Williams Partners reported unaudited net income
attributable to controlling interests of $431 million, a $1.880
billion improvement compared to full-year 2015 results. The
favorable change was driven by the absence of a $1.1 billion
impairment of goodwill and $929 million of lower impairments of
equity-method investments. The improvements also reflected an
increase in olefins margins associated with the Geismar olefins
plant, higher fee-based revenues, lower O&M and SG&A
expenses and higher equity earnings. These favorable changes were
partially offset by increased asset-impairment charges, a loss
associated with the sale of our Canadian operations, a reduction of
$119 million of insurance recoveries and higher interest
expenses.
Williams Partners reported fourth-quarter 2016 Adjusted EBITDA
of $1.113 billion, a $49 million increase over fourth-quarter 2015.
The increase was due primarily to $48 million lower O&M and
SG&A expenses and $17 million higher commodity margins. These
increases were partially offset by $23 million due to a one-time,
year-to-date true-up of amounts previously recognized during 2016
related to Barnett Shale minimum volume commitments caused by the
Barnett re-contracting that occurred during the fourth quarter.
For the year, Williams Partners reported Adjusted EBITDA of
$4.427 billion, a $338 million increase over full-year 2015
results. The increase is due primarily to $130 million lower
O&M and SG&A expenses, $111 million higher olefins margins
due primarily to a full year of Geismar operations, $93 million
higher fee-based revenues primarily due to expansion projects and
$47 million of higher proportional EBITDA from joint ventures.
These favorable changes were partially offset by $43 million of
other unfavorable changes including a $20 million unfavorable
change in foreign currency exchange gains and losses related to our
former Canadian operations.
Distributable Cash Flow and Distributions
For fourth-quarter 2016, Williams Partners generated $699
million in distributable cash flow (DCF) attributable to
partnership operations, compared with $718 million in DCF
attributable to partnership operations for the same period last
year. The decrease is due primarily to a $33 million increase in
maintenance capital and a $25 million increase in interest expense,
partially offset by the previously described improvement in
Adjusted EBITDA. For fourth-quarter 2016, the cash distribution
coverage ratio was 0.92x.
For the year, the partnership generated $2.970 billion in DCF,
an increase of $151 million over full-year 2015 DCF results. The
increase was due primarily to the $338 million increase in Adjusted
EBITDA described above, partially offset by $125 million higher
interest expense and $39 million higher maintenance capital. For
full-year 2016, the cash distribution coverage ratio was 1.01x.
On Feb. 10, 2017, Williams Partners paid a regular quarterly
cash distribution of $0.85 per unit for its common unitholders of
record at the close of business on Feb. 3, 2017.
CEO Perspective
Alan Armstrong, chief executive officer of Williams Partners’
general partner, made the following comments:
“We realized strong cash flows from operations in 2016. The fact
that Williams Partners delivered 8 percent year-over-year growth in
Adjusted EBITDA demonstrates the strength of our proven natural
gas-focused strategy. Our well-positioned natural gas
infrastructure assets enabled us to once again organically grow
fee-based revenues while our disciplined approach drove lower
expenses even as we brought new assets online.
“The demand for natural gas for clean-power generation, heating,
industrial use and LNG continues to increase as highlighted last
month when Transco established record high one-day and three-day
delivery volumes. We have construction underway on a number of
Transco-expansion projects. And just this month, we successfully
placed into service our Gulf Trace project, a 1.2 million dekatherm
per day expansion of the Transco pipeline system to serve Cheniere
Energy’s Sabine Pass Liquefaction export terminal in Louisiana.
Gulf Trace is just one of the five Transco projects that are
planned to be completed this year. This project was also brought in
under budget and nearly six months ahead of its original planned
in-service date.
“In January, we took steps to strengthen our financial position
and lower our cost of capital to match up with our peer-leading,
high-quality, low-risk growth portfolio. We continue to fortify our
focus on natural gas market fundamentals. Once the Geismar
monetization process is completed, we expect to be at approximately
97 percent fee-based revenues driven by natural gas volumes. As a
result, Williams and Williams Partners are positioned for
long-term, sustainable growth.”
Business Segment Results
Williams Partners Modified and Adjusted
EBITDA Amounts in millions
4Q 2016
4Q 2016 4Q 2015 4Q 2015
Full-Year 2016 Full-Year
2015 Modified EBITDA Adjust.
Adjusted EBITDA Modified EBITDA Adjust.
Adjusted EBITDA Modified EBITDA
Adjust. Adjusted EBITDA Modified EBITDA
Adjust. Adjusted EBITDA Atlantic-Gulf
$451 ($2 ) $449 $385 $5 $390 $1,600 $40
$1,640 $1,523 $5 $1,528 Central 340 (146 ) 194 384
(165 ) 219 807 105 912 840 59 899 NGL & Petchem Services 81 6
87 72 - 72 (23 ) 383 360 321 (124 ) 197 Northeast G&P 202 10
212 196 13 209 840 21 861 753 65 818 West 170 1 171 77 98 175 649 5
654 557 91 648 Other (9 ) 9 - (2 ) 1
(1 ) (9 ) 9 - 9 (10 ) (1
) Total
$1,235 ($122
) $1,113 $1,112
($48 )
$1,064 $3,864
$563 $4,427 $4,003
$86 $4,089
Definitions of modified EBITDA and adjusted EBITDA and
schedules reconciling these measures to net income are included in
this news release.
Atlantic-Gulf
For the fourth-quarter and full-year 2016, the Atlantic-Gulf
operating area included the Transco interstate gas pipeline and a
41 percent interest in the Constitution interstate gas pipeline
development project, which Williams Partners consolidates. The
segment also included the partnership’s significant natural gas
gathering and processing and crude oil production handling and
transportation in the Gulf Coast region. These operations include a
51 percent consolidated interest in Gulfstar One, a 50 percent
equity method interest in Gulfstream and a 60 percent equity-method
interest in the Discovery pipeline and processing system.
Atlantic-Gulf reported Modified EBITDA of $451 million for
fourth-quarter 2016, compared with $385 million for fourth-quarter
2015. Adjusted EBITDA increased by $59 million to $449 million for
the same time period. The increase in both measures was due
primarily to $47 million higher fee-based revenues primarily from
offshore projects and Transco expansion projects as well as $9
million of higher NGL margins.
For the year, Atlantic-Gulf reported Modified EBITDA of $1.600
billion, an increase of $77 million over full-year 2015. Adjusted
EBITDA increased $112 million to $1.640 billion. The increase in
Modified EBITDA was due primarily to $74 million higher fee-based
revenues predominantly from Transco expansion projects and offshore
expansions as well as $30 million higher proportional EBITDA from
Discovery. Partially offsetting these increases were higher
expenses primarily related to the net impact of new assets being
placed into service and increased maintenance and modernization
expenses. Modified EBITDA was also unfavorably impacted by
potential rate refunds associated with litigation,
severance-related costs, and project development costs, all of
which are excluded from Adjusted EBITDA.
Central
For the fourth-quarter and full-year 2016, the Central operating
area included operations that were previously part of the former
Access Midstream segment located in Louisiana, Texas, Arkansas and
Oklahoma. These operations became the Central operating area
effective Jan. 1, 2016 and prior-period segment disclosures have
been recast for this change. In 2016, Central provided gathering,
treating and compression services to producers under long-term,
fee-based contracts. The segment also includes a non-operated 50
percent interest in the Delaware Basin gas gathering system in the
Mid-Continent region.
The Central operating area reported Modified EBITDA of $340
million for fourth-quarter 2016, a decrease of $44 million from
fourth-quarter 2015. Adjusted EBITDA decreased by $25 million to
$194 million. The unfavorable change in Modified EBITDA was due
primarily to a $27 million reduction in fee-based revenues, which
decreased primarily due to volume declines in the Barnett and
Anadarko as well as a lower rate in the Barnett, Anadarko, and
Eagle Ford areas. These decreases were partially offset by higher
rates and volumes in the Haynesville Basin primarily attributable
to the restructured contract with Chesapeake. Modified EBITDA was
also favorably impacted by a $16 million decrease in O&M and
SG&A expenses from fourth-quarter 2015. Adjusted EBITDA was
unfavorably impacted by approximately $23 million due to a
one-time, year-to-date true-up of amounts previously recognized
during 2016 related to Barnett Shale minimum volume commitments
caused by the Barnett re-contracting that occurred during the
fourth quarter.
For the year, the Central operating area reported Modified
EBITDA of $807 million, a decrease of $33 million from full-year
2015 results. Adjusted EBITDA increased $13 million to $912
million. The decrease in Modified EBITDA was due primarily to lower
fee-based revenues and higher non-cash asset impairment charges.
Consistent with the fourth-quarter explanation, fee revenues
decreased primarily due to volume declines in the Barnett and
Anadarko as well as a lower rate in the Barnett, Anadarko, and
Eagle Ford areas. These decreases were partially offset by higher
rates and volumes in the Haynesville primarily attributable to the
restructured contract with Chesapeake. Full-year 2016 Modified
EBITDA was also favorably impacted by lower O&M and SG&A
expenses due to cost-reduction efforts and the absence of
prior-year merger and transition costs as well as higher
proportional EBITDA from joint-venture operations. Adjusted EBITDA
was not impacted by the impairment charges or merger and transition
costs.
NGL & Petchem Services
In 2016, NGL & Petchem Services operating area included an
88.5 percent undivided ownership interest in an olefins production
facility in Geismar, Louisiana, along with a refinery grade
propylene splitter and pipelines in the Gulf Coast region. This
segment also included the partnership’s energy commodities
marketing business, an NGL fractionator and storage facilities near
Conway, Kan. and a 50 percent equity-method interest in Overland
Pass Pipeline. Prior to the sale of all of our Canadian-based
assets effective Sept. 23, 2016, this segment included midstream
operations in Alberta, Canada, including an oil sands offgas
processing plant near Fort McMurray, 261 miles of NGL and olefins
pipelines and an NGL/olefins fractionation facility at
Redwater.
NGL & Petchem Services operating area reported Modified
EBITDA of $81 million for fourth-quarter 2016, compared with $72
million for fourth-quarter 2015. Adjusted EBITDA increased by $15
million to $87 million. The increase in Modified EBITDA was due
primarily to $7 million lower O&M and SG&A expenses and $6
million higher commodity margins. Partially offsetting these
increases were $8 million lower fee-based revenues.
For the year, NGL & Petchem Services operating area reported
Modified EBITDA of ($23) million compared with $321 million during
full-year 2015. Adjusted EBITDA increased $163 million to $360
million. The decrease in Modified EBITDA was due primarily to a
second-quarter 2016 non-cash impairment charge of $341 million
associated with our former Canadian operations, the additional loss
associated with the sale, and $119 million of lower
business-interruption proceeds. Partially offsetting these
unfavorable items were $111 million favorable olefins margins,
primarily related to higher volumes and prices at the Geismar
olefins plant, and a $30 million increase in fee-based revenues
primarily from our former Canadian operations. Adjusted EBITDA
excludes the impairment charge, additional loss-on-sale and
insurance proceeds.
Northeast G&P
Northeast G&P operating area includes the Susquehanna Supply
Hub, Ohio Valley Midstream, Marcellus South, Bradford and Utica
midstream gathering and processing operations as well as its
69-percent equity investment in Laurel Mountain Midstream, and its
58.4 percent equity investment in Caiman Energy II. Caiman Energy
II owns a 50 percent interest in Blue Racer Midstream. The
Marcellus South, Bradford and Utica midstream gathering and
processing operations that were previously within the former Access
Midstream segment became part of Northeast G&P effective Jan.
1, 2016 and prior period segment disclosures have been recast for
this change.
Northeast G&P operating area reported Modified EBITDA of
$202 million for fourth-quarter 2016, compared with $196 million
for fourth-quarter 2015. Adjusted EBITDA increased $3 million to
$212 million. The increase in Modified EBITDA was due primarily to
$15 million lower O&M and SG&A expenses and $12 million
higher fee-based revenues. Partially offsetting the increases was
$18 million lower proportional joint-venture EBITDA.
For the year, Northeast G&P operating area reported Modified
EBITDA of $840 million compared with $753 million for full-year
2015. Adjusted EBITDA increased $43 million to $861 million. The
increase in Modified EBITDA was driven by $37 million higher
fee-based revenues, $36 million reduced O&M expenses, and a
reduced level of non-cash impairment charges. Adjusted EBITDA
excludes the impact of non-cash impairment charges.
West
In 2016, the West operating area included the partnership’s
Northwest Pipeline interstate gas pipeline system, as well as
gathering, processing and treating operations in Wyoming, the
Piceance Basin and the Four Corners area.
West operating area reported Modified EBITDA of $170 million for
fourth-quarter 2016, compared with $77 million for fourth-quarter
2015. Adjusted EBITDA of $171 million is $4 million lower than the
same period in 2015. The increase in Modified EBITDA was driven
primarily by the absence of $97 million non-cash impairment charges
incurred in 2015. The favorable change in Modified EBITDA was also
driven by $7 million lower O&M and SG&A expenses, $4
million higher commodity margins, and $11 million lower fee-based
revenues. Adjusted EBITDA excludes the prior-year non-cash
impairment charges.
For the year, the West operating area reported Modified EBITDA
of $649 million compared with $557 million for full-year 2015.
Adjusted EBITDA increased $6 million to $654 million. The increase
in Modified EBITDA was driven primarily by the absence of $97
million non-cash impairment charges incurred in 2015. The favorable
change in Modified EBITDA was also driven by $26 million lower
O&M and SG&A expenses and $17 million lower fee-based
revenues. Adjusted EBITDA excludes the prior-year non-cash
impairment charges.
Financial Repositioning and Guidance
On Jan. 9, 2017, Williams Partners and Williams (NYSE: WMB)
announced a financial repositioning plan designed to strengthen
Williams Partners’ distribution coverage, enhance the partnership’s
credit profile, improve cost of capital, remove the partnership’s
need to access public equity markets for the next several years and
boost its growth outlook. The plan included the permanent waiver of
Incentive Distribution Rights (IDRs) held by Williams in exchange
for 289 million newly issued Williams Partners’ common units which
closed on Jan. 9.
Also as part of this plan, Williams purchased 58.7 million newly
issued Williams Partners common units with total proceeds of $2.1
billion. Williams Partners used $600 million of these proceeds
to repay 7.25 percent notes that matured on Feb. 1, 2017 and also
announced that on Feb. 23, 2017 it will redeem all of its $750
million 6.125 percent senior notes due 2022. We expect the
balance of the proceeds to be used to fund capital and investment
expenditures. Also as previously announced, Williams expects
to raise more than $2 billion in after-tax proceeds from planned
asset monetizations of Geismar and other select assets which are
not core to our strategy. We expect proceeds from these
monetizations will be used for additional debt reduction and to
fund capital and investment expenditures.
Additionally, the partnership announced its intent to pay a
regular quarterly cash distribution of $0.60 per common unit
beginning with the next quarterly distribution for the quarter
ending March 31, 2017. The partnership expects to pay $2.40 per
common unit for 2017 and is targeting 5 to 7 percent annual growth
over the next several years.
Guidance for 2017 (as previously announced on Jan. 9, 2017) is
unchanged.
Williams Partners’ Year-End 2016 Materials to be Posted
Shortly; Q&A Webcast Scheduled for Tomorrow
Williams Partners’ fourth-quarter and full-year 2016 financial
results package will be posted shortly at www.williams.com. The
materials will include the data book and analyst package.
Williams Partners and Williams will host a joint Q&A live
webcast on Thursday, Feb. 16 at 9:30 a.m. EST. A limited number of
phone lines will be available at (800) 946-0709. International
callers should dial (719) 325-2376. The conference ID is 7387877. A
link to the webcast, as well as replays of the webcast, will be
available for two weeks following the event at
www.williams.com.
Form 10-K
The partnership plans to file its 2016 Form 10-K with the
Securities and Exchange Commission next week. Once filed, the
document will be available on both the SEC and Williams Partners’
websites.
Definitions of Non-GAAP Measures
This news release may include certain financial measures –
Adjusted EBITDA, distributable cash flow and cash distribution
coverage ratio – that are non-GAAP financial measures as defined
under the rules of the SEC.
Our segment performance measure, modified EBITDA, is defined as
net income (loss) before 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.
We define distributable cash flow as adjusted EBITDA less
maintenance capital expenditures, cash portion of interest expense,
income attributable to non-controlling interests and cash income
taxes, plus WPZ restricted stock unit non-cash compensation expense
and certain other adjustments that management believes affects the
comparability of results. Adjustments for maintenance capital
expenditures and cash portion of interest expense include our
proportionate share of these items of our equity-method
investments.
We also calculate the ratio of distributable cash flow to the
total cash distributed (cash distribution coverage ratio). This
measure reflects the amount of distributable cash flow relative to
our cash distribution. We have also provided this ratio using the
most directly comparable GAAP measure, net income (loss).
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 Partnership's assets and the cash that the
business is generating.
Neither adjusted EBITDA nor distributable cash flow 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 Partners
Williams Partners is an industry-leading, large-cap natural gas
infrastructure master limited partnership with a strong growth
outlook and major positions in key U.S. supply basins. Williams
Partners has 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. 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. Tulsa, Okla.-based Williams (NYSE: WMB), a
premier provider of large-scale U.S. natural gas infrastructure,
owns approximately 74 percent of Williams Partners.
Forward-Looking Statements
The reports, filings, and other public announcements of 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 (Securities Act) and Section 21E of the Securities
Exchange Act of 1934, as amended (Exchange Act). 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.
All statements, other than statements of historical facts,
included in this report 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:
- Levels of cash distributions to limited
partner interests;
- Our and our affiliates’ future credit
ratings;
- 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;
- 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
report. 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:
- Whether we will produce sufficient cash
flows to provide the level of cash distributions that Williams
expects;
- Whether we will be able to effectively
execute our financing plan including the receipt of anticipated
levels of proceeds from planned asset sales;
- Whether Williams will be able to
effectively manage the transition in its board of directors and
management as well as successfully execute its business
restructuring;
- Availability of supplies, including
lower than anticipated volumes from third parties served by our
midstream business, and market demand;
- Volatility of pricing including the
effect of lower than anticipated energy commodity prices and
margins;
- Inflation, interest 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 timely execute our capital projects and
other investment opportunities in accordance with our forecasted
capital expenditures budget;
- Our ability to successfully expand our
facilities and operations;
- Development of alternative energy
sources;
- Availability of adequate insurance
coverage and the impact of operational and developmental hazards
and unforeseen interruptions;
- The impact of existing and future laws,
regulations, the regulatory environment, environmental liabilities,
and litigation as well as our ability to obtain permits and achieve
favorable rate proceeding outcomes;
- Williams’ costs and funding obligations
for defined benefit pension plans and other postretirement benefit
plans;
- Our allocated costs for defined benefit
pension plans and other postretirement benefit plans sponsored by
our 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 and physical damage
to our facilities;
- Acts of terrorism, including
cybersecurity threats and related disruptions;
- Additional risks described in our
filings with the “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 report.
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.
Limited partner units are inherently different from the capital
stock of a corporation, although many of the business risks to
which we are subject are similar to those that would be faced by a
corporation engaged in a similar business. You should carefully
consider our risk factors in addition to the other information in
this report. If any of such risks were actually to occur, our
business, results of operations and financial condition could be
materially adversely affected. In that case, we might not be able
to pay distributions on our common units, the trading price of our
common units could decline, and unitholders could lose all or part
of their investment.
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 our Annual Report on Form 10-K filed with
the SEC on Feb. 26, 2016 and in Part II, Item 1A. Risk Factors
in our Quarterly Reports on Form 10-Q available from our office or
from our website at www.williams.com
Williams
Partners L.P. Reconciliation of Non-GAAP Measures
(UNAUDITED) 2015
2016 (Dollars in millions, except coverage ratios) 1st Qtr
2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr
2nd Qtr 3rd Qtr 4th Qtr Year
Williams Partners L.P.
Reconciliation of GAAP "Net Income (Loss)" to Non-GAAP "Modified
EBITDA", "Adjusted EBITDA", and "Distributable cash flow”
Net income (loss) $ 112 $ 332 $ (167 ) $ (1,635 ) $ (1,358 ) $ 79 $
(77 ) $ 351 $ 166 $ 519 Provision (benefit) for income taxes 3 — 1
(3 ) 1 1 (80 ) (6 ) 5 (80 ) Interest expense 192 203 205 211 811
229 231 229 227 916 Equity (earnings) losses (51 ) (93 ) (92 ) (99
) (335 ) (97 ) (101 ) (104 ) (95 ) (397 ) Impairment of
equity-method investments — — 461 898 1,359 112 — — 318 430 Other
investing (income) loss (1 ) — — (1 ) (2 ) — (1 ) (28 ) — (29 )
Proportional Modified EBITDA of equity-method investments 136 183
185 195 699 189 191 194 180 754 Impairment of goodwill — — — 1,098
1,098 — — — — — Depreciation and amortization expenses 419 419 423
441 1,702 435 432 426 427 1,720 Accretion for asset retirement
obligations associated with nonregulated operations 7
9 5 7
28 7 9
8 7
31 Modified EBITDA 817 1,053 1,021 1,112 4,003 955 604 1,070
1,235 3,864 Adjustments Estimated minimum volume commitments
55 55 65 (175 ) — 60 64 70 (194 ) — Severance and related costs — —
— — — 25 — — 12 37 Potential rate refunds associated with rate case
litigation — — — — — 15 — — — 15 ACMP Merger and transition-related
expenses 32 14 2 2 50 5 — — — 5 Constitution Pipeline project
development costs — — — — — — 8 11 9 28 Share of impairment at
equity-method investments 8 1 17 7 33 — — 6 19 25 Geismar Incident
adjustment for insurance and timing — (126 ) — — (126 ) — — — (7 )
(7 ) Loss related to Geismar Incident 1 1 — — 2 — — — — —
Impairment of certain assets 3 24 2 116 145 — 389 — 22 411
Organizational realignment-related costs — — — — — — — — 24 24 Loss
related to Canada disposition — — — — — — — 32 2 34 Gain on asset
retirement — — — — — — — — (11 ) (11 ) Loss (recovery) related to
Opal incident 1 — (8 ) 1 (6 ) — — — — — Gain on extinguishment of
debt — (14 ) — — (14 ) — — — — — Expenses associated with strategic
asset monetizations — — — — — — — — 2 2 Expenses associated with
strategic alternatives — —
1 1 2
— — —
— — Total EBITDA
adjustments 100 (45 ) 79
(48 ) 86 105
461 119
(122 ) 563 Adjusted EBITDA 917 1,008
1,100 1,064 4,089 1,060 1,065 1,189 1,113 4,427 Maintenance
capital expenditures (1) (54 ) (80 ) (114 ) (114 ) (362 ) (58 ) (75
) (121 ) (147 ) (401 ) Interest expense (cash portion) (2) (204 )
(207 ) (219 ) (214 ) (844 ) (241 ) (245 ) (244 ) (239 ) (969 ) Cash
taxes (1 ) — — — (1 ) — — — (3 ) (3 ) Income attributable to
noncontrolling interests (3) (23 ) (32 ) (27 ) (29 ) (111 ) (29 )
(13 ) (31 ) (27 ) (100 ) WPZ restricted stock unit non-cash
compensation 7 6 7 7 27 7 5 2 2 16 Plymouth incident adjustment
4 6 7
4 21 —
— — —
— Distributable cash flow
attributable to Partnership Operations (4) 646
701 754 718
2,819 739 737
795 699
2,970 Total cash distributed (5) $ 725 $ 723 $
723 $ 725 $ 2,896 $ 725 $ 725 $ 734 $ 762 $ 2,946
Coverage ratios: Distributable cash flow attributable to
partnership operations divided by Total cash distributed
0.89 0.97 1.04
0.99 0.97 1.02
1.02 1.08
0.92 1.01 Net income
(loss) divided by Total cash distributed 0.15
0.46 (0.23 ) (2.26 )
(0.47 ) 0.11 (0.11 )
0.48 0.22
0.18 Notes: (1) Includes proportionate share
of maintenance capital expenditures of equity investments.
(2) Includes proportionate share of interest expense of equity
investments. (3) Excludes allocable share of impairment of
goodwill and certain EBITDA adjustments. (4) The fourth
quarter of 2016 includes income of $183 million associated with
proceeds from the contract restructuring in the Barnett Shale and
Mid-Continent region as the cash was received during 2016.
(5) In order to exclude the impact of the IDR waiver associated
with the WPZ merger termination fee from the determination of
coverage ratios, cash distributions have been increased for the
2015 third quarter, fourth quarter, and year by $209 million, $209
million, and $418 million, respectively, and by $10 million in the
first quarter of 2016. Cash distributions for the third quarter of
2016 have been increased to exclude the impact of the $150 million
IDR waiver associated with the sale of our Canadian operations.
Cash distributions for the fourth quarter of 2016 have been
decreased by $50 million to reflect the amount paid by WMB to WPZ
pursuant to the January 2017 Common Unit Purchase Agreement.
Williams Partners
L.P. 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
2nd Qtr 3rd Qtr 4th Qtr Year
Modified
EBITDA: Central $ 133 $ 160 $ 163 $
384 $ 840 $ 157 $ 134 $ 176 $ 340 $ 807 Northeast G&P 185 183
189 196 753 214 216 208 202 840 Atlantic-Gulf 335 389 414 385 1,523
376 357 416 451 1,600 West 161 150 169 77 557 155 158 166 170 649
NGL & Petchem Services 6 158 85 72 321 53 (261 ) 104 81 (23 )
Other (3 ) 13 1
(2 ) 9 — —
— (9 ) (9 )
Total Modified EBITDA $ 817
$ 1,053 $ 1,021
$ 1,112 $ 4,003
$ 955 $ 604
$ 1,070 $ 1,235
$ 3,864 Adjustments:
Central
Estimated minimum volume commitments $ 55 $ 55 $ 65 $ (175 ) $ — $
60 $ 64 $ 70 $ (194 ) $ — Severance and related costs — — — — — 6 —
— 2 8 ACMP Merger and transition costs 30 14 2 2 48 3 — — — 3
Impairment of certain assets — 3
—
8 11 — 48 — 22 70 Organizational realignment-related costs —
—
—
—
— — —
— 24 24
Total Central adjustments 85 72 67 (165 ) 59 69 112 70 (146 ) 105
Northeast
G&P
Severance and related costs — — — — — 3 — — — 3 Share of impairment
at equity-method investments 8 1 17 7 33 — — 6 10 16 ACMP Merger
and transition costs — — — — — 2 — — — 2 Impairment of certain
assets 3 21 2
6 32 —
— — —
— Total Northeast G&P adjustments 11 22 19
13 65 5 — 6 10 21
Atlantic-Gulf
Potential rate refunds associated with rate case litigation — — — —
— 15 — — — 15 Severance and related costs — — — — — 8 — — — 8
Constitution Pipeline project development costs — — — — — — 8 11 9
28 Impairment of certain assets — — — 5 5 — — — — — Gain on asset
retirement — — —
— — —
— — (11 )
(11 ) Total Atlantic-Gulf adjustments — — — 5 5 23 8 11 (2 )
40
West
Severance and related costs — — — — — 4 — — 1 5 Impairment of
certain assets — — — 97 97 — — — — — Loss (recovery) related to
Opal incident 1 —
(8 ) 1 (6 ) —
— — —
— Total West adjustments 1 — (8 ) 98 91 4 — — 1 5
NGL & Petchem
Services
Impairment of certain assets — — — — — — 341 — — 341 Loss related
to Canada disposition — — — — — — — 32 2 34 Share of impairment at
equity-method investments — — — — — — — — 9 9 Severance and related
costs — — — — — 4 — — — 4 Expenses associated with strategic asset
monetizations — — — — — — — — 2 2 Loss related to Geismar Incident
1 1 — — 2 — — — — — Geismar Incident adjustment for insurance and
timing — (126 ) —
— (126 ) —
— — (7 ) (7 )
Total NGL & Petchem Services adjustments 1 (125 ) — — (124 ) 4
341 32 6 383
Other
Severance and related costs — — — — — — — — 9 9 ACMP Merger-related
expenses 2 — — — 2 — — — — — Expenses associated with strategic
alternatives — — 1 1 2 — — — — — Gain on extinguishment of debt
— (14 ) —
— (14 ) — —
— — — Total
Other adjustments 2 (14 ) 1 1 (10 ) — — — 9 9
Total Adjustments
$ 100 $ (45 )
$ 79 $ (48
) $ 86 $ 105
$ 461 $ 119
$ (122 ) $ 563
Adjusted EBITDA: Central $ 218 $ 232 $ 230 $ 219 $
899 $ 226 $ 246 $ 246 $ 194 $ 912 Northeast G&P 196 205 208 209
818 219 216 214 212 861 Atlantic-Gulf 335 389 414 390 1,528 399 365
427 449 1,640 West 162 150 161 175 648 159 158 166 171 654 NGL
& Petchem Services 7 33 85 72 197 57 80 136 87 360 Other
(1 ) (1 ) 2 (1 )
(1 ) — — —
— —
Total Adjusted
EBITDA $ 917 $ 1,008
$ 1,100 $
1,064 $ 4,089 $
1,060 $ 1,065 $
1,189 $ 1,113 $
4,427
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170215006128/en/
Williams Partners L.P.Media Contact:Keith Isbell,
918-573-7308orInvestor Contacts:John Porter,
918-573-0797orBrett Krieg, 918-573-4614
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