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The Williams Companies (WMB) Up 6.4% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Williams Companies, Inc. (The) (WMB - Free Report) . Shares have added about 6.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is The Williams Companies due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Williams Q2 Earnings Beat Estimates, Revenues Lag
The Williams Companies reported second-quarter 2024 adjusted earnings per share of 43 cents, which beat the Zacks Consensus Estimate of 39 cents. The Transmission & Gulf of Mexico and West segments delivered strong year-over-year results, leading to the outperformance. The bottom line also marginally increased from the year-ago period’s level of 42 cents per share despite the weak year-over-year performance of the Northeast G&P Segment.
Williams’ revenues of $2.3 billion missed the Zacks Consensus Estimate of $2.6 billion and decreased from the year-ago quarter’s reported figure of $2.5 billion. The underperformance was due to decreased service revenues (related to commodity considerations) and net losses from commodity derivatives on a year-over-year basis.
In the quarter, Williams optimized its portfolio by exiting the company’s position in the Aux Sable joint venture and consolidating its ownership interest in the Gulf of Mexico Discovery system. The company also completed Transco's Regional Energy Access project into full service ahead of schedule on Aug 1 along with the completion of the Marcellus South and MountainWest Uinta Basin expansions.
Additionally, WMB signed a precedent agreement for Transco's Gillis West expansion in the quarter under review. The company commenced construction on the Louisiana Energy Gateway gathering, treating and carbon capture & sequestration project, as well as on Transco's Texas to Louisiana Energy Pathway expansion.
Key Takeaways
Adjusted EBITDA totaled $1.7 billion in the quarter under review, up 3.5% year over year. This was driven by positive net contributions from acquisitions and expansion projects.
Cash flow from operations amounted to $1.3 billion, down 7.1 % from the corresponding quarter of 2023. This decrease was due to unfavorable net changes in working capital and derivative collateral requirements.
Segmental Analysis
Transmission & Gulf of Mexico: The segment reported an adjusted EBITDA of $812 million, up 8.6% from the year-ago quarter’s level. This was fueled by favorable net contributions from the Gulf Coast Storage acquisition and the Regional Energy Access expansion project, along with higher equity AFUDC.
West: This segment focuses on the gathering and processing of assets in the Western United States. Adjusted EBITDA for this segment totaled $319 million, up 2.2% from the prior-year quarter’s level of $312 million.This strong performance can be attributed to the acquisitions in the DJ Basin and higher volumes on the Overland Pass Pipeline.
Northeast G&P: This segment registered an adjusted EBITDA of $479 million, down 7% from $515 million in the year-earlier quarter. This decrease can be linked to lower gathering volumes.
Gas & NGL Marketing Services: This unit reported an adjusted EBITDA loss of $14 million, an improvement from the $16 million loss in the prior-year quarter.
Costs, Capex & Balance Sheet
In the reported quarter, total costs and expenses of $1.6 billion increased almost 1.7% from the year-ago quarter’s figure.
Total capital expenditure was $1.1 billion compared with $1.2 billion a year ago. As of Jun 30, 2024, the company had cash and cash equivalents of $55 million and a long-term debt of $24.1 billion, with a debt-to-capitalization of 62%.
Strategic Divestiture & Gulf of Mexico Acquisition
The Oklahoma-based energy infrastructure provider has taken steps to strengthen its financial position and focus on the company’s core operations. WMB divested its 14% stake in a joint venture with Aux Sable for $160 million. This non-operating venture, which includes a processing and fractionation facility in Illinois and a gas gathering pipeline in North Dakota, exposed Williams to volatile cash flows due to commodity price fluctuations.
Simultaneously, the company acquired Phillips 66's 40% stake in the Discovery pipeline system in the Gulf of Mexico for $170 million, achieving full ownership of the pipeline. This acquisition also includes PSX's Dauphin Island Gathering Partners system.
These strategic moves are aimed at reducing WMB's exposure to commodity price volatility and enhancing the profitability of its growing Gulf of Mexico assets.
Guidance
Williams anticipates Adjusted EBITDA in the upper half of its 2024 guided range of $6.8 billion to $7.1 billion. The company also maintains its 2024 expectations for growth capex between $1.45 billion and $1.75 billion and maintenance capex ranging from $1.1 billion to $1.3 billion, which includes $350 million allocated for emissions reduction and modernization initiatives.
Looking ahead to 2025, Williams expects Adjusted EBITDA to be between $7.2 billion and $7.6 billion, with growth capex of $1.65 billion to $1.95 billion and maintenance capex of $750 million to $850 million, including $100 million at the midpoint for emissions reduction and modernization efforts. The company also projects a leverage ratio midpoint of 3.85x for 2024 and has increased its annual dividend by 6.1%, from $1.79 in 2023 to $1.90.
Strategic Divestiture & Gulf of Mexico Acquisition
The Oklahoma-based energy infrastructure provider has taken steps to strengthen its financial position and focus on the company’s core operations. WMB divested its 14% stake in a joint venture with Aux Sable for $160 million. This non-operating venture, which includes a processing and fractionation facility in Illinois and a gas gathering pipeline in North Dakota, exposed Williams to volatile cash flows due to commodity price fluctuations.
Simultaneously, the company acquired Phillips 66's 40% stake in the Discovery pipeline system in the Gulf of Mexico for $170 million, achieving full ownership of the pipeline. This acquisition also includes PSX's Dauphin Island Gathering Partners system.
These strategic moves are aimed at reducing WMB's exposure to commodity price volatility and enhancing the profitability of its growing Gulf of Mexico assets.
Guidance
Williams anticipates Adjusted EBITDA in the upper half of its 2024 guided range of $6.8 billion to $7.1 billion. The company also maintains its 2024 expectations for growth capex between $1.45 billion and $1.75 billion and maintenance capex ranging from $1.1 billion to $1.3 billion, which includes $350 million allocated for emissions reduction and modernization initiatives.
Looking ahead to 2025, Williams expects Adjusted EBITDA to be between $7.2 billion and $7.6 billion, with growth capex of $1.65 billion to $1.95 billion and maintenance capex of $750 million to $850 million, including $100 million at the midpoint for emissions reduction and modernization efforts. The company also projects a leverage ratio midpoint of 3.85x for 2024 and has increased its annual dividend by 6.1%, from $1.79 in 2023 to $1.90.
Strategic Divestiture & Gulf of Mexico Acquisition
The Oklahoma-based energy infrastructure provider has taken steps to strengthen its financial position and focus on the company’s core operations. WMB divested its 14% stake in a joint venture with Aux Sable for $160 million. This non-operating venture, which includes a processing and fractionation facility in Illinois and a gas gathering pipeline in North Dakota, exposed Williams to volatile cash flows due to commodity price fluctuations.
Simultaneously, the company acquired Phillips 66's 40% stake in the Discovery pipeline system in the Gulf of Mexico for $170 million, achieving full ownership of the pipeline. This acquisition also includes PSX's Dauphin Island Gathering Partners system.
These strategic moves are aimed at reducing WMB's exposure to commodity price volatility and enhancing the profitability of its growing Gulf of Mexico assets.
Guidance
Williams anticipates Adjusted EBITDA in the upper half of its 2024 guided range of $6.8 billion to $7.1 billion. The company also maintains its 2024 expectations for growth capex between $1.45 billion and $1.75 billion and maintenance capex ranging from $1.1 billion to $1.3 billion, which includes $350 million allocated for emissions reduction and modernization initiatives.
Looking ahead to 2025, Williams expects Adjusted EBITDA to be between $7.2 billion and $7.6 billion, with growth capex of $1.65 billion to $1.95 billion and maintenance capex of $750 million to $850 million, including $100 million at the midpoint for emissions reduction and modernization efforts. The company also projects a leverage ratio midpoint of 3.85x for 2024 and has increased its annual dividend by 6.1%, from $1.79 in 2023 to $1.90.
The Oklahoma-based energy infrastructure provider has taken steps to strengthen its financial position and focus on the company’s core operations. WMB divested its 14% stake in a joint venture with Aux Sable for $160 million. This non-operating venture, which includes a processing and fractionation facility in Illinois and a gas gathering pipeline in North Dakota, exposed Williams to volatile cash flows due to commodity price fluctuations.
Simultaneously, the company acquired Phillips 66's 40% stake in the Discovery pipeline system in the Gulf of Mexico for $170 million, achieving full ownership of the pipeline. This acquisition also includes PSX's Dauphin Island Gathering Partners system.
These strategic moves are aimed at reducing WMB's exposure to commodity price volatility and enhancing the profitability of its growing Gulf of Mexico assets.
The Oklahoma-based energy infrastructure provider has taken steps to strengthen its financial position and focus on the company’s core operations. WMB divested its 14% stake in a joint venture with Aux Sable for $160 million. This non-operating venture, which includes a processing and fractionation facility in Illinois and a gas gathering pipeline in North Dakota, exposed Williams to volatile cash flows due to commodity price fluctuations.
Simultaneously, the company acquired Phillips 66's 40% stake in the Discovery pipeline system in the Gulf of Mexico for $170 million, achieving full ownership of the pipeline. This acquisition also includes PSX's Dauphin Island Gathering Partners system.
These strategic moves are aimed at reducing WMB's exposure to commodity price volatility and enhancing the profitability of its growing Gulf of Mexico assets.
The Oklahoma-based energy infrastructure provider has taken steps to strengthen its financial position and focus on the company’s core operations. WMB divested its 14% stake in a joint venture with Aux Sable for $160 million. This non-operating venture, which includes a processing and fractionation facility in Illinois and a gas gathering pipeline in North Dakota, exposed Williams to volatile cash flows due to commodity price fluctuations.
Simultaneously, the company acquired Phillips 66's 40% stake in the Discovery pipeline system in the Gulf of Mexico for $170 million, achieving full ownership of the pipeline. This acquisition also includes PSX's Dauphin Island Gathering Partners system.
These strategic moves are aimed at reducing WMB's exposure to commodity price volatility and enhancing the profitability of its growing Gulf of Mexico assets.
The Oklahoma-based energy infrastructure provider has taken steps to strengthen its financial position and focus on the company’s core operations. WMB divested its 14% stake in a joint venture with Aux Sable for $160 million. This non-operating venture, which includes a processing and fractionation facility in Illinois and a gas gathering pipeline in North Dakota, exposed Williams to volatile cash flows due to commodity price fluctuations.
Simultaneously, the company acquired Phillips 66's 40% stake in the Discovery pipeline system in the Gulf of Mexico for $170 million, achieving full ownership of the pipeline. This acquisition also includes PSX's Dauphin Island Gathering Partners system.
These strategic moves are aimed at reducing WMB's exposure to commodity price volatility and enhancing the profitability of its growing Gulf of Mexico assets.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
At this time, The Williams Companies has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
The Williams Companies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
The Williams Companies belongs to the Zacks Oil and Gas - Production and Pipelines industry. Another stock from the same industry, Enbridge (ENB - Free Report) , has gained 5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Enbridge reported revenues of $8.29 billion in the last reported quarter, representing a year-over-year change of +6.7%. EPS of $0.42 for the same period compares with $0.51 a year ago.
For the current quarter, Enbridge is expected to post earnings of $0.45 per share, indicating a change of -2.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.4% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Enbridge. Also, the stock has a VGM Score of F.
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The Williams Companies (WMB) Up 6.4% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Williams Companies, Inc. (The) (WMB - Free Report) . Shares have added about 6.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is The Williams Companies due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Williams Q2 Earnings Beat Estimates, Revenues Lag
The Williams Companies reported second-quarter 2024 adjusted earnings per share of 43 cents, which beat the Zacks Consensus Estimate of 39 cents. The Transmission & Gulf of Mexico and West segments delivered strong year-over-year results, leading to the outperformance. The bottom line also marginally increased from the year-ago period’s level of 42 cents per share despite the weak year-over-year performance of the Northeast G&P Segment.
Williams’ revenues of $2.3 billion missed the Zacks Consensus Estimate of $2.6 billion and decreased from the year-ago quarter’s reported figure of $2.5 billion. The underperformance was due to decreased service revenues (related to commodity considerations) and net losses from commodity derivatives on a year-over-year basis.
In the quarter, Williams optimized its portfolio by exiting the company’s position in the Aux Sable joint venture and consolidating its ownership interest in the Gulf of Mexico Discovery system. The company also completed Transco's Regional Energy Access project into full service ahead of schedule on Aug 1 along with the completion of the Marcellus South and MountainWest Uinta Basin expansions.
Additionally, WMB signed a precedent agreement for Transco's Gillis West expansion in the quarter under review. The company commenced construction on the Louisiana Energy Gateway gathering, treating and carbon capture & sequestration project, as well as on Transco's Texas to Louisiana Energy Pathway expansion.
Key Takeaways
Adjusted EBITDA totaled $1.7 billion in the quarter under review, up 3.5% year over year. This was driven by positive net contributions from acquisitions and expansion projects.
Cash flow from operations amounted to $1.3 billion, down 7.1 % from the corresponding quarter of 2023. This decrease was due to unfavorable net changes in working capital and derivative collateral requirements.
Segmental Analysis
Transmission & Gulf of Mexico: The segment reported an adjusted EBITDA of $812 million, up 8.6% from the year-ago quarter’s level. This was fueled by favorable net contributions from the Gulf Coast Storage acquisition and the Regional Energy Access expansion project, along with higher equity AFUDC.
West: This segment focuses on the gathering and processing of assets in the Western United States. Adjusted EBITDA for this segment totaled $319 million, up 2.2% from the prior-year quarter’s level of $312 million.This strong performance can be attributed to the acquisitions in the DJ Basin and higher volumes on the Overland Pass Pipeline.
Northeast G&P: This segment registered an adjusted EBITDA of $479 million, down 7% from $515 million in the year-earlier quarter. This decrease can be linked to lower gathering volumes.
Gas & NGL Marketing Services: This unit reported an adjusted EBITDA loss of $14 million, an improvement from the $16 million loss in the prior-year quarter.
Costs, Capex & Balance Sheet
In the reported quarter, total costs and expenses of $1.6 billion increased almost 1.7% from the year-ago quarter’s figure.
Total capital expenditure was $1.1 billion compared with $1.2 billion a year ago. As of Jun 30, 2024, the company had cash and cash equivalents of $55 million and a long-term debt of $24.1 billion, with a debt-to-capitalization of 62%.
Strategic Divestiture & Gulf of Mexico Acquisition
The Oklahoma-based energy infrastructure provider has taken steps to strengthen its financial position and focus on the company’s core operations. WMB divested its 14% stake in a joint venture with Aux Sable for $160 million. This non-operating venture, which includes a processing and fractionation facility in Illinois and a gas gathering pipeline in North Dakota, exposed Williams to volatile cash flows due to commodity price fluctuations.
Simultaneously, the company acquired Phillips 66's 40% stake in the Discovery pipeline system in the Gulf of Mexico for $170 million, achieving full ownership of the pipeline. This acquisition also includes PSX's Dauphin Island Gathering Partners system.
These strategic moves are aimed at reducing WMB's exposure to commodity price volatility and enhancing the profitability of its growing Gulf of Mexico assets.
Guidance
Williams anticipates Adjusted EBITDA in the upper half of its 2024 guided range of $6.8 billion to $7.1 billion. The company also maintains its 2024 expectations for growth capex between $1.45 billion and $1.75 billion and maintenance capex ranging from $1.1 billion to $1.3 billion, which includes $350 million allocated for emissions reduction and modernization initiatives.
Looking ahead to 2025, Williams expects Adjusted EBITDA to be between $7.2 billion and $7.6 billion, with growth capex of $1.65 billion to $1.95 billion and maintenance capex of $750 million to $850 million, including $100 million at the midpoint for emissions reduction and modernization efforts. The company also projects a leverage ratio midpoint of 3.85x for 2024 and has increased its annual dividend by 6.1%, from $1.79 in 2023 to $1.90.
Strategic Divestiture & Gulf of Mexico Acquisition
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
At this time, The Williams Companies has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
The Williams Companies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
The Williams Companies belongs to the Zacks Oil and Gas - Production and Pipelines industry. Another stock from the same industry, Enbridge (ENB - Free Report) , has gained 5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Enbridge reported revenues of $8.29 billion in the last reported quarter, representing a year-over-year change of +6.7%. EPS of $0.42 for the same period compares with $0.51 a year ago.
For the current quarter, Enbridge is expected to post earnings of $0.45 per share, indicating a change of -2.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.4% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Enbridge. Also, the stock has a VGM Score of F.