Williams (WMB) Q2 Earnings Beat Estimates, Revenues Miss
The Williams Companies WMB reported second-quarter 2023 adjusted earnings of 42 cents per share, which beat the Zacks Consensus Estimate of 39 cents. The bottom line also surpassed the year-ago period’s reported figure of 40 cents due to higher-than-expected contributions from two major segments — West and Northeast G&P.
Williams’ revenues of $2.48 billion missed the Zacks Consensus Estimate of $2.69 billion due to lower product sales. The top line also decreased from the year-ago quarter’s reported figure of $2.49 billion.
Key Takeaways
Adjusted EBITDA was $1.61 billion in the quarter under review, up 7.3% from the prior-year quarter’s level. The figure also beat our estimate of $1.53 billion. Cash flow from operations totaled $1.38 billion, up 25.5% from that recorded in the corresponding quarter of 2022.
Segmental Analysis
Transmission & Gulf of Mexico: The segment reported an adjusted EBITDA of $748 billion, up 14.7% from the year-ago quarter’s level. This was largely driven by much higher service revenues. The figure also outpaced our prediction of $636.5 million.
West: This segment registered an adjusted EBITDA of $312 million, 5.4% higher than $296 million recorded in the year-earlier quarter. The figure also beat our estimate of $303.3 million. The improvement resulted from contributions from Trace Midstream and the benefits of realized gains on natural gas hedges.
Northeast G&P: Adjusted EBITDA for this segment was $515 million, up 14.4% from the prior-year quarter’s $450 million. The figure also beat our estimate of $442.5 million. This uptick in performance can be attributed to higher volumes at Ohio Valley Midstream, Marcellus South and Cardinal.
Gas & NGL Marketing Services: This unit generated an adjusted EBITDA loss of 16 million against a profit of $6 million in the year-ago quarter. This was due to low commodity margins. The reported figure missed our predicted profit of $51.9 million.
Costs, Capex & Balance Sheet
Total costs and expenses were $1.61 billion in the reported quarter.
Total capital expenditure was $715 million compared with $429 million a year ago. As of Jun 30, 2023, the company had cash and cash equivalents of $551 million, and a long-term debt of $21.53 billion, with a debt-to-capitalization of 60.2%.
Guidance
WMB expects full-year adjusted EBITDA to be in the range of $6.4-$6.8 billion. Growth capital spending is anticipated to be in the band of $1.6-$1.9 billion. Williams expects to achieve a leverage ratio mid-point of 3.65. The dividend guidance for 2023 increased 5.3% on an annualized basis to $1.79 from $1.70 per share in 2022.
Zacks Rank and Key Picks
Currently, WMB carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the energy sector are Murphy USA MUSA, sporting a Zacks Rank #1 (Strong Buy), and Evolution Petroleum EPM and Archrock AROC, both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA is valued at around $6.55 billion. In the past year, its shares have risen 5.6%
MUSA currently pays a dividend of $1.52 per share, or 0.51% on an annual basis. Its payout ratio currently sits at 6% of earnings.
Evolution Petroleum is worth approximately $319.05 million. EPM currently pays a dividend of 48 cents per share, or 5.20% on an annual basis.
The company currently has a forward P/E ratio of 8.88. In comparison, its industry has an average forward P/E of 13.60, which means EPM is trading at a discount to the group.
Archrock is valued at around $2.01 billion. It delivered an average earnings surprise of 15.08% for the last four quarters and its current dividend yield is 4.67%.
Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.
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Williams Companies, Inc. (The) (WMB) : Free Stock Analysis Report
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