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Williams (WMB) Q1 Earnings Beat Estimates, Increase Y/Y

·4 min read

The Williams Companies, Inc. WMB reported first-quarter 2021 adjusted earnings per share (EPS) of 35 cents, beating the Zacks Consensus Estimate of 28 cents as well as the year-ago quarter’s earnings of 26 cents.

This outperformance can be attributed to higher-than-expected contributions from its two segments. Precisely, adjusted EBITDA from the West and the Northeast G&P units totaled $315 million and $402 million each, ahead of their respective Zacks Consensus Estimate of $247 million and $397 million.

Also, for the quarter ended Mar 31, the company’s revenues of $2.61 billion beat the Zacks Consensus Estimate by 22.71% and also increased from the year-ago figure of $1.9 billion.

Takeaways

Adjusted EBITDA was $1.4 billion in the quarter under review, reflecting an increase of 12.1% from the corresponding period of 2020. Cash flow from operations totaled $915 million compared with $787 million in the prior-year period. Favorable net working capital changes drove cash flow in the quarter.

Segmental Analysis

Transmission & Gulf of Mexico: Comprising Williams’ massive Transco pipeline system and the Northwest Pipeline, the segment generated adjusted EBITDA of $660 million, lower than the year-ago quarter’s $669 million. Despite marginal gains in service revenues, commodity margins and investee EBITDA, the unit’s performance was offset by higher operating and administrative expenses.

West: This segment includes gathering and processing assets in the Western region of the United States. It delivered adjusted EBITDA of $315 million, which is 45.8% higher than $216 million recorded in the year-earlier quarter. The improved results were driven by higher product marketing margins resulting from elevated prices and the absence of prior-year inventory effects plus lower operating and administrative expenses.

Northeast G&P: Engaged in natural gas gathering and processing along with the NGL fractionation business in Marcellus and Utica shale regions, the segment generated an adjusted EBITDA of $402 million, up 8.7% from the prior-year quarter’s $370 million. Increased gathering volumes on its Bradford and Marcellus South systems and higher equity-method investments contributions drove the results.

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

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

Williams Companies, Inc. The price-consensus-eps-surprise-chart | Williams Companies, Inc. The Quote

Costs, Capex & Balance Sheet

In the reported quarter, total costs and expenses increased 26.4% to $1.9 billion from $1.5 billion a year ago, primarily due to higher product expenses.

Williams’ total capital expenditure was $277 million in the first quarter, down from $284 million a year ago. As of Mar 31, 2021, the company had cash and cash equivalents of $1.13 billion and a long-term debt of $21.1 billion with a debt-to-capitalization of 64.3%.

2021 Guidance

The company updated full-year adjusted EBITDA to the band of $5.2-$5.4 billion from the prior guided range of $5.05-$5.35 million. It reiterates its growth capital spending in the band of $1-$1.2 billion. It expects to generate positive free cash flow, which will allow it to maintain financial stability.

Zacks Rank & Key Picks

Williams currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Whiting Petroleum Corporation WLL, Diamondback Energy, Inc. FANG and Continental Resources, Inc. CLR, each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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