Williams' (WMB) Q4 Earnings Beat Estimates, Revenues Miss
Williams Companies, Inc. WMB reported fourth-quarter 2022 adjusted earnings per share of 53 cents, beating the Zacks Consensus Estimate of 47 cents. It also surpassed the year-ago period’s profit of 39 cents per share. The outperformance was due to higher contributions from its two segments — Transmission & Gulf of Mexico and West.
Meanwhile, in the quarter that ended Dec 31, Williams’ revenues of $2.9 billion underperformed the Zacks Consensus Estimate of $3.2 billion. It also came in below the year-ago quarter’s revenues of $3.3 billion. The underperformance could be attributed to decreased product sales.
Key Takeaways
Adjusted EBITDA was $1.8 billion in the quarter under review, indicating a 19.7% increase from the year-ago period. Cash flow from operations totaled $1.2 billion, up 7% from the prior-year quarter’s tally.
Williams Companies, Inc. (The) Price, Consensus and EPS Surprise
Williams Companies, Inc. (The) price-consensus-eps-surprise-chart | Williams Companies, Inc. (The) Quote
Segmental Analysis
Transmission & Gulf of Mexico: Comprising WMB’s massive Transco pipeline system and Northwest Pipeline, the segment generated adjusted EBITDA of $700 million, up 2.2% from the year-ago quarter. Overall, the growth of Transmission & Gulf of Mexico was driven by the acquisition of NorTex, Transco's Leidy South project, and improved resilience to natural disasters.
West: This segment focuses on the gathering and processing of assets in the Western region of the United States. It delivered an adjusted EBITDA of $326 million, 25.9% higher than $259 million recorded in the year-ago quarter.
The better outcomes were mainly due to higher net realized commodity-based rates and greater Haynesville gathering volumes comprising contributions from Trace Midstream acquired in April.
Northeast G&P: The unit generated adjusted EBITDA of $464 million, up almost 1% from the prior-year quarter’s $459 million.
The slight positive comparison was mainly because of Ohio Valley Midstream and gathering rate hikes. This was partly offset by lower Susquehanna volumes, higher operating and administrative costs, and lower net equity-investee contributions due to lower cost-of-service rates, lower volumes, and the impact of winter weather.
Gas & NGL Marketing Services: This unit generated adjusted EBITDA of $149 million, up significantly from the prior-year quarter’s $11 million.
This segment's performance improved on the back of steady commodity margins, which involved reducing inventory values to reflect lower market prices at the quarter’s end.
Costs, Capex & Balance Sheet
In the reported quarter, total costs and expenses of $1.85 billion were reduced by almost 20% compared with the year-ago quarter’s figure of $2.32 billion.
Williams’ total capital investment was $876 million, up from $371 million a year ago.
As of Dec 31, 2022, the company had cash and cash equivalents of $152 million and long-term debt of $21.9 billion, with a debt-to-capitalization of almost 61%.
2023 Guidance
WMB anticipates its 2023 adjusted EBITDA in the $6.4-$6.8 billion range, and growth capital spending in the $1.4-$1.7 billion range. Williams also expects to achieve a leverage ratio midpoint of 3.65X.
The company anticipates its maintenance capital expenditures between $750 million and $850 million.
Zacks Rank and Key Picks
Currently, Williams carries a Zacks Rank #3 (Hold). Meanwhile, investors interested in the energy sector might look at some better-ranking stocks like NGL Energy Partners (NGL) sporting a Zacks Rank #1 (Strong Buy) or Energy Transfer ET and Halliburton (HAL) both holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NGL Energy Partners: NGL Energy Partners is worth approximately $365.07 billion. Its shares have increased 28.7% in the past year.
NGL Energy Partners LP is a limited partnership company that operates a vertically-integrated propane business with three segments — retail propane, wholesale supply and marketing, and midstream.
Energy Transfer LP: Energy Transfer LP is valued at around $39.80 billion. ET delivered an average earnings surprise of 11.43% for the last four quarters, and its current dividend yield is 9.49%.
Energy Transfer LP currently has a forward P/E ratio of 8.93. In comparison, its industry has an average forward P/E of 10.40, which means Energy Transfer LP is trading at a discount to the group.
Halliburton: Halliburtonis valued at around $33.44 billion. In the past year, HP stock has increased by 40.2%.
TX-based Halliburton Company, headquartered in Houston, is one of the largest oilfield service providers in the world with a trailing four-quarter earnings surprise of roughly 5.87%, on average.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Williams Companies, Inc. (The) (WMB) : Free Stock Analysis Report
Halliburton Company (HAL) : Free Stock Analysis Report
NGL Energy Partners LP (NGL) : Free Stock Analysis Report
Energy Transfer LP (ET) : Free Stock Analysis Report
