Williams Companies Beats on Earnings by a Penny - Analyst Blog

North American energy firm, Williams Companies Inc. WMB reported first quarter 2014 adjusted earnings from continuing operations of 28 cents per share, 27.3% higher than the prior-year quarter level of 22 cents. The bottom line also beat the Zacks Consensus Estimate by a penny. Improved performance by the company's core business segments and higher fee-based revenues aided the results.

However, for the quarter ending Mar 31, Williams Companies reported revenues of $1,749.0 million, down 3.4% year over year. Reported revenues also failed to meet the Zacks Consensus Estimate of $1,840.0 million. Results were affected by reduced NGL margins and the negative impact of the dropdown of the Canadian operations.

Segmental Analysis

Williams Partners: This segment reported adjusted operating profit of $563.0 million in the quarter, up 15.4% from $488.0 million in the year-ago quarter. Improved fee-based revenues aided the results, which was however partially offset by reduced NGL margins and an increase in operating costs.

Williams NGL & Petchem Services: The unit registered quarterly adjusted operating loss of $5.0 million, wider than the first quarter 2013 loss of $2.0 million. The results were impacted by the dropdown of certain Canadian operations to Williams Partners L.P. WPZ.

Access Midstream Partners: The segment reported an adjusted operating profit of $6.0 million as a result of higher equity earnings from its stake in natural gas partnership Access Midstream Partners, L.P. ACMP.

Other: The segment posted adjusted operating income of $3.0 million, compared with a loss of $5.0 million in the year-ago quarter.

Operating and Maintenance Expenses

Operating and maintenance expenses were recorded at $298.0 million, 14.6% higher than $260.0 million in the first quarter of 2013.

Capital Expenditure & Balance Sheet

During the reported quarter, Williams Companies' capital expenditure came in at $793.0 million. As of Mar 31, 2014, the company had long-term debt of $12,099.0 million, representing a debt-to-capitalization ratio of 72.4%. Williams Companies has a cash balance of about $1,064.0 million.   

Guidance

Williams Companies reiterated 2014 adjusted earnings per share in the range of $1.00–$1.20 (indicating a mid-point of $1.10). The same for 2015 is projected between $1.35 and $1.65 (mid-point $1.50).

Williams Companies anticipates total adjusted operating profit of $2,200.0–$2,600.0 million in 2014 and $2,820.0−$3,320.0 million in 2015.

Williams Companies restated its annual dividend payout growth projection at 20% for both 2014 and 2015.

Zacks Rank & Other Stock Picks

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

Meanwhile, one can consider better-ranked players in the oil production and pipeline sector such as EQT Midstream Partners, LP EQM, which currently holds a Zacks Rank #2 (Buy).