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The Williams Companies, Inc. WMB reported third-quarter 2020 adjusted earnings per share of 27 cents, meeting the Zacks Consensus Estimate, attributable to a strong contribution from the Northeast G&P unit. The bottom line was, however, partially offset by weak results from the Transmission & Gulf of Mexico segment.Nonetheless, the bottom line improved 3.85% from the year-earlier quarter's adjusted earnings of 26 cents.
The energy infrastructure provider’s quarterly revenues of $1.93 billion outpaced the Zacks Consensus Estimate by 9.40% but decreased from the year-ago figure of $2 billion.
Distributable cash flows came in at $772 million, down 6.1% from the year-ago number of $822 million. Adjusted EBITDA was $1.26 billion in the quarter under review, marginally lower than the year-ago quarter’s figure of $1.27 billion. Cash flow from operations totaled $452 million compared with $858 million in the prior-year period.
Transmission & Gulf of Mexico: Consisting of Williams’ Transco Pipeline and assets in the Gulf Coast area, the segment generated adjusted EBITDA of $622 million, down 8.5% from $680 million in the year-ago quarter. This underperformance was caused by depressed service revenues from lower non-cash deferred revenue amortization at Gulfstar One. Apart from declining revenues, a number of temporary production shut-ins induced by hurricane hampered segment profitability.
West: This segment includes the Northwest pipeline and operations in various regions, such as Colorado, Mid-Continent and Haynesville Shale among others. It delivered adjusted EBITDA of $245 million, marginally higher than the year-earlier figure of $244 million. Soft revenues in Barnett Shale affected the result, which was partially offset by minimized 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 adjusted EBITDA of $396 million, up 15.5% from the prior-year quarter’s $343 million, led by record gathering and processing volumes. Expanded volumes from the new Northeast JV along with added ownership in Utica East Ohio Midstream also boosted results. Moreover, cost-minimizing efforts aided segmental profitability.
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 decreased to $1.29 billion from $1.37 billion a year ago owing to fall in product expenses and G&A costs.
Williams’ total capital expenditure was $938 million in the third quarter, down substantially from $1.7 billion a year ago.
As of Sep 30, 2020, the company had cash and cash equivalents worth $70 million and a long-term debt of $21.95 billion with a debt-to-capitalization of 64.5%.
The company anticipates full-year adjusted EBITDA in the lower end of its earlier guided range of $4.95-$5.25 billion. Growth capex view for the year is expected in the $1-$1.2 billion band, lower than the earlier-issued $1.1-$1.3 billion range.
Zacks Rank & Key Picks
Williams currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy space are Oasis Petroleum Inc OASPQ, Antero Resources Corporation AR and Earthstone Energy, Inc. ESTE, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Williams Companies, Inc. The (WMB) : Free Stock Analysis Report
Antero Resources Corporation (AR) : Free Stock Analysis Report
Earthstone Energy, Inc. (ESTE) : Free Stock Analysis Report
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