Market Overview

Williams Reaffirms Strong Dividend Growth in 2012-2014 as Previously Announced Despite New, Lower Earnings Expectations for 2Q Through 2013; Raising Earnings Guidance in 2014


Maintaining Outlook for 55% Higher Dividend in 2012 and 20% Growth in Each 2013 and 2014; Supported by Growing Fee-Based Business and Benefit of Projects Coming Into Service

Increasing 2014 Adjusted EPS Guidance Midpoint to $1.95 on Ethylene Crack Spread Recovering to First-Half 2012 Level, Strength of Fundamental Business, Growth and Some Improvement in NGL Prices

Lowering 2012 and 2013 Adjusted EPS Guidance Midpoint to $1.15 and $1.38, Respectively

Estimating 2Q 2012 Adjusted EPS of Approximately $0.21, Down From $0.39 in 1Q 2012

Key Driver for 2012-2013 Earnings Change Is Near-Term NGL Prices – Sharply Lower as Result of Record-Warm Winter, Slowing Economy, Growing Supplies and Other Factors

Company Intends to Pursue Drop-Down of Geismar Olefins-Production Facility Interest to Majority-Owned Williams Partners L.P.

Developing Many Attractive Projects to Meet Growing Infrastructure Demand

Williams (NYSE: WMB) today reaffirmed its previously published outlook for robust dividend growth through 2014, despite lowering its earnings outlook for 2012 and 2013 primarily because of less-favorable commodity prices. At the same time, the company increased its 2014 outlook for adjusted earnings per share at a level 59 percent higher than in 2011, based on the strength of its fundamental business, growth and improvement in certain commodity prices driven by continued high crude oil-to-gas ratios.

Williams continues to expect to pay a full-year 2012 shareholder dividend of $1.20 per share, a 55 percent increase over 2011. As well, the company confirmed it expects the full-year dividend it pays shareholders in each 2013 and 2014 to increase by 20 percent – to $1.44 and $1.75 per share, respectively. The dividend increases are supported by growing fee-based business and the benefit of new projects coming into service, as well as by strong cash coverage. The strength in cash coverage is designed to provide a significant buffer to periodic commodity-price volatility and other potential adverse factors.

For the second quarter this year, Williams expects its adjusted earnings per share will be significantly lower than the first-quarter's results, primarily because of an unexpectedly sharp decline in natural-gas-liquids margins in May and June at Williams Partners L.P. (NYSE: WPZ). Additional factors in the change include higher expenses at Williams Partners because of maintenance accelerated during a third-party fractionator outage; costs associated with recent acquisitions; normal seasonal demand changes and maintenance at Williams Partners' gas pipeline business; somewhat lower-than-expected volumes because of construction timing; lower Canadian sales volumes as a result of third-party outages and the effect of filling our new Boreal Pipeline, which went into service in late June.

The company estimates its second-quarter adjusted earnings per share will be approximately $0.21, down from $0.39 in the first quarter this year and $0.29 in the second quarter last year. The company's estimates of its second-quarter results are preliminary and subject to change based on completion of its normal quarter-end review process. As previously announced, the company plans to report its finalized second-quarter financial results on Aug. 1.

Posted-In: News Guidance


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