Williams Companies Misses on Q2 Earnings, Guidance Intact

North American energy firm, Williams Companies Inc. WMB reported second-quarter 2015 adjusted earnings from continuing operations of 15 cents per share, which widely missed the Zacks Consensus Estimate of 27 cents. The bottom line also deteriorated from the year-ago quarter adjusted figure of 23 cents.
 

 

For the quarter ended Jun 30, Williams Companies reported revenues of $1,839 million, down 9.6% year over year. Moreover, the top line failed to surpass the Zacks Consensus Estimate of $2,185 million.   

Significant higher operating expenses along with decreased natural gas liquid NGL margin hurt the results.

Segmental Analysis

Williams Partners: This segment reported adjusted operating profit of $1,008 million in the quarter, up 40.6% from $717 million in the year-ago quarter. Significant contribution from Access Midstream following the merger along with new fee-based revenues from the Gulfstar One and Transco expansion projects supported the results. A partial dampener came in the form of a decreased NGL margin.

Williams NGL & Petchem Services: The unit registered adjusted operating loss of $3 million, narrower than the year-ago quarter loss of $7 million.

Other: The segment posted adjusted operating profit of $12 million, down 80% from the year-ago quarter profit of $60 million. During the second quarter of last year, this segment had generated $53 million earnings from the company's equity investment in Access Midstream.

Operating and Maintenance Expenses

Operating and maintenance expenses were recorded at $437 million, almost 42% higher than $308 million in the second quarter of 2014.

Capital Expenditure & Balance Sheet

During the reported quarter, Williams Companies' capital expenditure came in at $822 million. As of Jun 30, 2015, the company had long-term debt of $21,285 million, representing a debt-to-capitalization ratio of 74.7%. Williams Companies has a cash balance of about $204 million.

Guidance

Capital and investment expenditures' projection are maintained at $3,960–$4,590 million for 2015, $3,300–$3,910 million for 2016 and $3,025–$3,625 million for 2017. The company also provided projection for 2015 capital and investment expenditures at $1,300–$1,600 million.

Williams Companies continues to guide third quarter dividend at 64 cents per share. The company still projects 2015 and 2016 dividend of $2.47 and $2.85 per share, respectively. Moreover, for 2016 through 2020, the company reaffirmed its dividend hike expectation of 10−15%.

Zacks Rank & Other Stock Picks

Williams Companies currently carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, some better-ranked players in the energy sector are Western Gas Equity Partners, LP WGP, Tallgrass Energy Partners LP TEP and Vanguard Natural Resources LLC VNR. All these stocks sport a Zacks Rank #1 (Strong Buy).

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WILLIAMS COS WMB: Free Stock Analysis Report
 
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