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Release Details

Williams Reports Third-Quarter 2019 Financial Results

October 30, 2019
TULSA, Okla.--(BUSINESS WIRE)--Williams (NYSE: WMB) today announced its unaudited financial results for the three and nine months ended Sept. 30, 2019.

Strong 3Q 2019 Results Compared with 3Q 2018

  • Net Income attributable to Williams available to common stockholders of $220 million – up $91 million or 71%; Year-to-Date (YTD) up $308 million or 74%
  • Net Income Per Share of $0.18 – up 38%; YTD is $0.60 – up 30%
  • Adjusted Income Per Share of $0.26 – up 8%; YTD is $0.75 – up 23%
  • Cash Flow From Operations of $858 million – up $112 million or 15%; YTD up 16%
  • Adjusted EBITDA of $1.274 billion – up $78 million or 7%; YTD up $290 million or 8%
  • Distributable Cash Flow ("DCF") of $822 million – up $58 million or 8%; YTD up $345 million or 16%
  • Dividend Coverage Ratio is 1.78x
  • Debt (Net of Cash) to Adjusted EBITDA at Quarter End: 4.47x

Solid Execution Delivers Strong Results; Record Fee-Based Revenue, Adjusted EBITDA and Gathering Volumes

  • Northeast G&P segment up 23% in Modified EBITDA and 22% in Adjusted EBITDA 3Q 2019 vs. 3Q 2018
  • Northeast G&P gathering volumes up 17% 3Q 2019 vs. 3Q 2018
  • Atlantic-Gulf segment up 22% in Modified EBITDA and 27% in Adjusted EBITDA 3Q 2019 vs. 3Q 2018
  • Reached settlement terms on Transco Rate Case, pending FERC approval
  • Placed Rivervale South to Market expansion project into full service on Sept. 1, 2019; Transco expansion provides 190,000 dekatherms of firm natural gas service per day to meet growing heating and power generation demand for northeastern consumers
  • Received FERC approval authorizing Southeastern Trail expansion project, a 296,375 dekatherms per day expansion designed to serve Transco pipeline markets in the Mid-Atlantic and Southeastern U.S. in time for the 2020/2021 winter heating season
  • Filed application with FERC seeking authorization for Leidy South project – 582,400 dekatherms per day expansion of Transco pipeline system to connect Marcellus and Utica supplies with markets along Atlantic Seaboard
  • Commissioned Rocky Mountain Midstream (RMM) JV's second DJ Basin processing plant, Keenesburg I, on schedule; adds 225 MMcf/d processing capacity to RMM assets

CEO Perspective

Alan Armstrong, president and chief executive officer, made the following comments:

"Our third-quarter 2019 results show why we're so confident in the long-term sustainability of our business. Even in the current challenging commodity environment, we once again delivered year-over-year growth in our key financial metrics and remain on track for our 2019 guidance. Compared to third-quarter 2018, our Net Income increased by 71% and Cash Flow From Operations rose 15% as our demand-driven, natural gas strategy continues to drive earnings and steadily growing cash flows while maintaining strong dividend coverage.

"Williams is helping meet growing clean energy demands as highlighted by our Transco Pipeline system, which recently placed our Rivervale South to Market project into service in New Jersey, received approval from FERC for the Southeastern Trail expansion project and filed application with the FERC seeking authorization for the Leidy South project. Combined with other expansion projects under construction or in various levels of permitting, we expect Transco's system-design capacity to increase from its current 17.2 million dekatherms per day to more than 18 million dekatherms per day in time for the 2020/2021 winter heating season. We also completed and commissioned several key projects in the DJ and Wamsutter basins during the quarter."

Armstrong added, "Natural gas is fundamentally important to achieving both economic development and emissions reductions goals, both in the United States and abroad. As we continue to focus on connecting the best supplies to the best markets, natural gas demand will continue to drive realized and future growth for our business. And we will continue to run our business in an environmentally responsible manner as evidenced by the fact that since 2012, we've eliminated more than half of our methane emissions from our gas processing plants and transmission compressor stations."

Williams Summary Financial Information

3Q

 

 

YTD

Amounts in millions, except ratios and per-share amounts. Per share amounts are reported on a diluted basis. Net income (loss) amounts are attributable to The Williams Companies, Inc. available to common stockholders.

2019

2018

 

 

2019

2018

 

 

 

 

 

 

 

GAAP Measures

 

 

 

 

 

 

Net Income

$220

$129

 

 

$724

$416

Net Income Per Share

$0.18

$0.13

 

 

$0.60

$0.46

Cash Flow From Operations

$858

$746

 

 

$2,702

$2,331

 

 

 

 

 

 

 

Non-GAAP Measures (1)

 

 

 

 

 

 

Adjusted EBITDA

$1,274

$1,196

 

 

$3,731

$3,441

Adjusted Income

$321

$243

 

 

$907

$545

Adjusted Income Per Share

$0.26

$0.24

 

 

$0.75

$0.61

Distributable Cash Flow

$822

$764

 

 

$2,469

$2,124

Dividend Coverage Ratio

1.78x

1.85x

 

 

1.79x

1.64x

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

Debt-to-Adjusted EBITDA at Quarter End (2)

4.47x

4.65x

 

 

 

 

Capital Investments (3)(4)

$849

$1,330

 

 

$2,068

$3,285

 

(1)

 

Schedules reconciling adjusted income from continuing operations, adjusted EBITDA, Distributable Cash Flow and Coverage Ratio (non-GAAP measures) to the most comparable GAAP measure are available at www.williams.com and as an attachment to this news release

(2)

 

Debt-to-Adjusted EBITDA ratio does not represent leverage ratios measured for WMB credit agreement compliance or leverage ratios as calculated by the major credit ratings agencies. Debt is net of cash on hand, and Adjusted EBITDA reflects the sum of the last four quarters.

(3)

 

Capital Investments includes increases to property, plant, and equipment, purchases of businesses, net of cash acquired, and purchases of and contributions to equity-method investments.

(4)

 

YTD 2019 excludes $728 million (net of cash acquired) for the purchase of the remaining 38% of UEO as this amount was provided for at the close of the new Northeast JV by our JV partners, CPPIB, in June 2019.

GAAP Measures

  • Third-quarter 2019 Net Income benefited from increased service revenues in the Atlantic-Gulf segment primarily from Transco expansion projects and in the Northeast G&P segment driven by growth in gathering volumes, partially offset by a decline in the West segment results due to lower commodity margins, lower deferred revenue recognition in the Barnett Shale associated with the end of a contractual minimum volume commitment (MVC) period, and the absence of the former Four Corners area business sold in fourth-quarter 2018. The current year also benefited from reduced operating and administrative expenses, including the absence of costs associated with the WPZ merger, and a favorable change in the provision for income taxes due primarily to the absence of 2018 valuation allowance charge on deferred tax assets that may not be realized following the WPZ merger. The period was negatively impacted by $114 million of impairments of equity-method investments and the absence of a $45 million benefit recognized in 2018 related to adjusting regulatory assets associated with an increase in Transco’s estimated deferred state income tax rate following the WPZ merger. Net Income also reflects less income attributable to noncontrolling interests driven by the WPZ merger in third-quarter 2018.
  • YTD 2019 Net Income benefited from increased service revenues in the Atlantic-Gulf segment primarily from Transco expansion projects and in the Northeast G&P segment driven by growth in volumes, partially offset by a decline in West segment results due to lower commodity margins and the absence of the former Four Corners area business. Other drivers of the improvement include reduced operating and administrative expenses, including the absence of costs associated with the WPZ merger, a $122 million gain on the sale of our 50% interest in Jackalope and the absence of a $105 million valuation allowance charge on deferred tax assets that may not be realized following the WPZ merger. These improvements were partially offset by $186 million of impairments of equity-method investments, the absence of a $62 million gain the prior year associated with the deconsolidation of our Jackalope interest, higher interest expense associated with financing obligations for leased pipeline capacity, a decrease in the allowance for equity funds used during construction (EAFUDC), and the previously described absence of a $45 million benefit recognized in 2018 related to adjusting regulatory assets. Asset impairments in the current year were substantially offset by similar levels of impairments in the prior year. Net income also reflects less income attributable to noncontrolling interests driven by the WPZ merger in third-quarter 2018.
  • The increase in Cash Flow From Operations for third-quarter and YTD 2019 periods was largely driven by the increased service revenues in the Atlantic-Gulf and Northeast G&P segments and the collection of Transco's filed rates subject to refund, partially offset by the decline in West segment results. The YTD 2019 period also benefited from the receipt of an income tax refund.

Non-GAAP Measures

  • The increase in Adjusted EBITDA for third-quarter 2019 and YTD 2019 largely reflects the previously mentioned increased service revenues in the Atlantic-Gulf and Northeast G&P segments, partially offset by the decline in West segment results.
  • Adjusted Income for both the quarter and YTD periods also improved, driven by the higher Adjusted EBITDA and less income attributable to noncontrolling interests, partially offset by higher interest expense, lower EAFUDC, and an increased provision for income taxes.
  • Third-quarter and YTD 2019 DCF are higher, reflecting the increased Adjusted EBITDA and lower maintenance capital, partially offset by higher net interest expense. The YTD increase also benefited from an income tax refund received in 2019.

Business Segment Results & Form 10-Q

Williams' operations are comprised of the following reportable segments: Atlantic-Gulf, West, Northeast G&P and Other. For additional information, please see the company's third-quarter 2019, Form 10-Q, which Williams expects to file this week with the Securities and Exchange Commission (SEC). Once filed, the document will be on the SEC and Williams websites.

 

Quarter-To-Date

 

Year-To-Date

Amounts in millions

Modified EBITDA

 

Adjusted EBITDA

 

Modified EBITDA

 

Adjusted EBITDA

3Q 2019

3Q 2018

Change

 

3Q 2019

3Q 2018

Change

 

2019

2018

Change

 

2019

2018

Change

Atlantic-Gulf

$599

 

$492

 

$107

 

 

$611

 

$480

 

$131

 

 

$1,683

 

$1,418

 

$265

 

 

$1,730

 

$1,402

 

$328

 

West

311

 

412

 

(101

)

 

313

 

424

 

(111

)

 

921

 

1,214

 

(293

)

 

1,015

 

1,219

 

(204

)

Northeast G&P

345

 

281

 

64

 

 

343

 

281

 

62

 

 

947

 

786

 

161

 

 

964

 

786

 

178

 

Other

(2

)

6

 

(8

)

 

7

 

11

 

(4

)

 

1

 

(49

)

50

 

 

22

 

34

 

(12

)

Totals

$1,253

 

$1,191

 

$62

 

 

$1,274

 

$1,196

 

$78

 

 

$3,552

 

$3,369

 

$183

 

 

$3,731

 

$3,441

 

$290

 

 

Note: Williams uses Modified EBITDA for its segment reporting. Definitions of Modified EBITDA and Adjusted EBITDA and schedules reconciling to net income are included in this news release.

Atlantic-Gulf

  • Improvement in third-quarter and YTD 2019 Modified and Adjusted EBITDA is driven by Transco expansion projects, including Atlantic Sunrise (in service October 2018) and Gulf Connector (in service early January 2019) and $44 million of adjustments related to reaching settlement terms in the Transco Rate Case (pending FERC approval). The $44 million includes reductions to the reserve established against the filed rate we began collecting in March of this year along with other related accounting entries. Approximately $16 million of the $44 million relates specifically to third-quarter 2019.
  • Unfavorably impacting results was reduced EAFUDC due to lower levels of construction activity.

West

  • Lower third-quarter and YTD 2019 Modified and Adjusted EBITDA reflect lower NGL margins (excluding Four Corners) driven by lower NGL prices, the absence of EBITDA from our former Four Corners area business, the sale of our Jackalope interest, the absence of deferred revenue associated with our former Delaware basin assets that were contributed for our Brazos Permian II interest in December 2018, and lower deferred revenue recognition in the Barnett Shale associated with the end of a contractual MVC period.
  • Modified EBITDA for the YTD 2019 period includes asset impairment charges that are excluded from Adjusted EBITDA.
  • Third-quarter and YTD 2019 results reflect higher gathering volumes in the Eagle Ford and Haynesville. Eagle Ford gathering volumes increased by 19% versus third-quarter 2018 and by 10% YTD over the same reporting period in 2018. Haynesville gathering volumes increased by 18% versus third-quarter 2018 and by 9% YTD over the same reporting period in 2018.

Northeast G&P

  • Improvement in Modified and Adjusted EBITDA for third-quarter and YTD 2019 was driven by increased service revenues from the Susquehanna Supply Hub, the Utica Shale region, and Ohio Valley, as well as the acquisition of Utica East Ohio Midstream.
  • Both third-quarter and YTD 2019 reflect a 17% increase in gross gathering volumes, including 100% of operated equity-method investments, over the same reporting periods in 2018.

Williams' Third-Quarter 2019 Materials to be Posted Shortly; Q&A Webcast Scheduled for Tomorrow

Williams' third-quarter 2019 earnings presentation will be posted at www.williams.com . The company’s third-quarter 2019 earnings conference call and webcast with analysts and investors is scheduled for Thursday, Oct. 31, at 9:30 a.m. Eastern Time (8:30 a.m. Central Time). A limited number of phone lines will be available at (800) 367-2403. International callers should dial (334) 777-6978. The conference ID is 1823519. A webcast link to the conference call is available at www.williams.com . A replay of the webcast will be available on the website for at least 90 days following the event.

Williams' Analyst Day Set for Dec. 5

Williams is scheduled to host its 2019 Analyst Day event Dec. 5, 2019. During the event, Williams' management will give in-depth presentations covering all of the company's energy infrastructure businesses. This year's Analyst Day meeting is scheduled to begin at 8:15 a.m. Eastern Time (7:15 a.m. Central Time) and run approximately four hours. Presentation slides along with a link to the live video webcast will be accessible at www.williams.com the morning of Dec. 5. A replay of the 2019 Analyst Day webcast will also be available on the website for at least 90 days following the event.

About Williams

Williams (NYSE: WMB) is a premier provider of large-scale infrastructure connecting U.S. natural gas and natural gas products to growing demand for cleaner fuel and feedstocks. Headquartered in Tulsa, Oklahoma, Williams is an industry-leading, investment grade C-Corp with operations across the natural gas value chain including gathering, processing, interstate transportation and storage of natural gas and natural gas liquids. With major positions in top U.S. supply basins, Williams owns and operates more than 30,000 miles of pipelines system wide – including Transco, the nation’s largest volume and fastest growing pipeline – providing natural gas for clean-power generation, heating and industrial use. Williams’ operations handle approximately 30% of U.S. natural gas. www.williams.com

The Williams Companies, Inc.

Consolidated Statement of Income

(Unaudited)

       

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

 

(Millions, except per-share amounts)

Revenues:

 

 

 

 

 

 

 

Service revenues

$

1,495

 

 

$

1,371

 

 

$

4,424

 

 

$

4,062

 

Service revenues – commodity consideration

38

 

 

121

 

 

158

 

 

316

 

Product sales

466

 

 

811

 

 

1,512

 

 

2,104

 

Total revenues

1,999

 

 

2,303

 

 

6,094

 

 

6,482

 

Costs and expenses:

 

 

 

 

 

 

 

Product costs

434

 

 

790

 

 

1,442

 

 

2,039

 

Processing commodity expenses

19

 

 

30

 

 

83

 

 

91

 

Operating and maintenance expenses

364

 

 

389

 

 

1,091

 

 

1,134

 

Depreciation and amortization expenses

435

 

 

425

 

 

1,275

 

 

1,290

 

Selling, general, and administrative expenses

130

 

 

174

 

 

410

 

 

436

 

Impairment of certain assets

 

 

 

 

76

 

 

66

 

Other (income) expense – net

(11

)

 

(6

)

 

30

 

 

24

 

Total costs and expenses

1,371

 

 

1,802

 

 

4,407

 

 

5,080

 

Operating income (loss)

628

 

 

501

 

 

1,687

 

 

1,402

 

Equity earnings (losses)

93

 

 

105

 

 

260

 

 

279

 

Other investing income (loss) – net

(107

)

 

2

 

 

(54

)

 

74

 

Interest incurred

(303

)

 

(286

)

 

(915

)

 

(856

)

Interest capitalized

7

 

 

16

 

 

27

 

 

38

 

Other income (expense) – net

1

 

 

52

 

 

19

 

 

99

 

Income (loss) before income taxes

319

 

 

390

 

 

1,024

 

 

1,036

 

Provision (benefit) for income taxes

77

 

 

190

 

 

244

 

 

297

 

Net income (loss)

242

 

 

200

 

 

780

 

 

739

 

Less: Net income (loss) attributable to noncontrolling interests

21

 

 

71

 

 

54

 

 

323

 

Net income (loss) attributable to The Williams Companies, Inc.

221

 

 

129

 

 

726

 

 

416

 

Preferred stock dividends

1

 

 

 

 

2

 

 

 

Net income (loss) available to common stockholders

$

220

 

 

$

129

 

 

$

724

 

 

$

416

 

Basic earnings (loss) per common share:

 

 

 

 

 

 

 

Net income (loss)

$

.18

 

 

$

.13

 

 

$

.60

 

 

$

.47

 

Weighted-average shares (thousands)

1,212,270

 

 

1,023,587

 

 

1,211,938

 

 

893,706

 

Diluted earnings (loss) per common share:

 

 

 

 

 

 

 

Net income (loss)

$

.18

 

 

$

.13

 

 

$

.60

 

 

$

.46

 

Weighted-average shares (thousands)

1,214,165

 

 

1,026,504

 

 

1,213,943

 

 

896,322

 

         

The Williams Companies, Inc.

Consolidated Balance Sheet

(Unaudited)

         

 

 

September 30,
2019

 

December 31,
2018

 

 

(Millions, except per-share amounts)

ASSETS

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

247

 

 

$

168

 

Trade accounts and other receivables (net of allowance of $6 at September 30, 2019 and $9 at December 31, 2018)

 

875

 

 

992

 

Inventories

 

129

 

 

130

 

Other current assets and deferred charges

 

183

 

 

174

 

Total current assets

 

1,434

 

 

1,464

 

Investments

 

6,228

 

 

7,821

 

Property, plant, and equipment

 

41,647

 

 

38,661

 

Accumulated depreciation and amortization

 

(12,034

)

 

(11,157

)

Property, plant, and equipment – net

 

29,613

 

 

27,504

 

Intangible assets – net of accumulated amortization

 

8,041

 

 

7,767

 

Regulatory assets, deferred charges, and other

 

965

 

 

746

 

Total assets

 

$

46,281

 

 

$

45,302

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

602

 

 

$

662

 

Accrued liabilities

 

1,184

 

 

1,102

 

Long-term debt due within one year

 

1,538

 

 

47

 

Total current liabilities

 

3,324

 

 

1,811

 

Long-term debt

 

20,719

 

 

22,367

 

Deferred income tax liabilities

 

1,651

 

 

1,524

 

Regulatory liabilities, deferred income, and other

 

3,728

 

 

3,603

 

Contingent liabilities

 

 

 

 

Equity:

 

 

 

 

Stockholders’ equity:

 

 

 

 

Preferred stock

 

35

 

 

35

 

Common stock ($1 par value; 1,470 million shares authorized at September 30, 2019 and December 31, 2018; 1,247 million shares issued at September 30, 2019 and 1,245 million shares issued at December 31, 2018)

 

1,247

 

 

1,245

 

Capital in excess of par value

 

24,310

 

 

24,693

 

Retained deficit

 

(10,664

)

 

(10,002

)

Accumulated other comprehensive income (loss)

 

(266

)

 

(270

)

Treasury stock, at cost (35 million shares of common stock)

 

(1,041

)

 

(1,041

)

Total stockholders’ equity

 

13,621

 

 

14,660

 

Noncontrolling interests in consolidated subsidiaries

 

3,238

 

 

1,337

 

Total equity

 

16,859

 

 

15,997

 

Total liabilities and equity

 

$

46,281

 

 

$

45,302

 

   

The Williams Companies, Inc.

Consolidated Statement of Cash Flows

(Unaudited)

   

 

Nine Months Ended
September 30,

 

2019

 

2018

 

(Millions)

OPERATING ACTIVITIES:

 

Net income (loss)

$

780

 

 

$

739

 

Adjustments to reconcile to net cash provided (used) by operating activities:

 

 

 

Depreciation and amortization

1,275

 

 

1,290

 

Provision (benefit) for deferred income taxes

268

 

 

351

 

Equity (earnings) losses

(260

)

 

(279

)

Distributions from unconsolidated affiliates

458

 

 

507

 

Net (gain) loss on disposition of equity-method investments

(122

)

 

 

Impairment of equity-method investments

186

 

 

 

(Gain) loss on deconsolidation of businesses

2

 

 

(62

)

Impairment of and net (gain) loss on sale of certain assets

76

 

 

64

 

Amortization of stock-based awards

44

 

 

43

 

Cash provided (used) by changes in current assets and liabilities:

 

 

 

Accounts and notes receivable

159

 

 

75

 

Inventories

7

 

 

(39

)

Other current assets and deferred charges

(10

)

 

(44

)

Accounts payable

(76

)

 

(76

)

Accrued liabilities

76

 

 

(62

)

Other, including changes in noncurrent assets and liabilities

(161

)

 

(176

)

Net cash provided (used) by operating activities

2,702

 

 

2,331

 

FINANCING ACTIVITIES:

 

 

 

Proceeds from (payments of) commercial paper – net

(4

)

 

821

 

Proceeds from long-term debt

736

 

 

3,745

 

Payments of long-term debt

(904

)

 

(3,201

)

Proceeds from issuance of common stock

10

 

 

15

 

Proceeds from sale of partial interest in consolidated subsidiary

1,330

 

 

 

Common dividends paid

(1,382

)

 

(974

)

Dividends and distributions paid to noncontrolling interests

(86

)

 

(552

)

Contributions from noncontrolling interests

32

 

 

13

 

Payments for debt issuance costs

 

 

(26

)

Other – net

(11

)

 

(46

)

Net cash provided (used) by financing activities

(279

)

 

(205

)

INVESTING ACTIVITIES:

 

 

 

Property, plant, and equipment:

 

 

 

Capital expenditures (1)

(1,705

)

 

(2,659

)

Dispositions – net

(32

)

 

(2

)

Contributions in aid of construction

25

 

 

395

 

Purchases of businesses, net of cash acquired

(728

)

 

 

Proceeds from dispositions of equity-method investments

485

 

 

 

Purchases of and contributions to equity-method investments

(361

)

 

(803

)

Other – net

(28

)

 

86

 

Net cash provided (used) by investing activities

(2,344

)

 

(2,983

)

Increase (decrease) in cash and cash equivalents

79

 

 

(857

)

Cash and cash equivalents at beginning of year

168

 

 

899

 

Cash and cash equivalents at end of period

$

247

 

 

$

42

 

_____________

 

 

 

(1) Increases to property, plant, and equipment

$

(1,707

)

 

$

(2,482

)

Changes in related accounts payable and accrued liabilities

2

 

 

(177

)

Capital expenditures

$

(1,705

)

 

$

(2,659

)

   

Atlantic-Gulf

 

(UNAUDITED)

 

 

2018

 

2019

 

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

3rd Qtr

Year

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Service revenues:

 

 

 

 

 

 

 

 

 

 

 

Nonregulated gathering & processing fee-based revenue

$

138

 

$

128

 

$

138

 

$

137

 

$

541

 

 

$

128

 

$

119

 

$

117

 

$

364

 

 

Regulated transportation revenue

413

 

406

 

411

 

508

 

1,738

 

 

517

 

514

 

549

 

1,580

 

 

Other fee revenues

32

 

34

 

34

 

34

 

134

 

 

34

 

40

 

32

 

106

 

 

Tracked service revenue

26

 

22

 

24

 

24

 

96

 

 

30

 

25

 

33

 

88

 

 

Nonregulated commodity consideration

15

 

12

 

18

 

14

 

59

 

 

13

 

13

 

7

 

33

 

 

Product sales:

 

 

 

 

 

 

 

 

 

 

 

NGL sales from gas processing

15

 

10

 

16

 

15

 

56

 

 

12

 

12

 

6

 

30

 

 

Marketing sales

45

 

57

 

67

 

53

 

222

 

 

40

 

32

 

23

 

95

 

 

Other sales

1

 

1

 

1

 

 

3

 

 

2

 

1

 

1

 

4

 

 

Tracked product sales

32

 

37

 

47

 

38

 

154

 

 

28

 

23

 

46

 

97

 

 

Total revenues

717

 

707

 

756

 

823

 

3,003

 

 

804

 

779

 

814

 

2,397

 

 

Segment costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

NGL cost of goods sold

15

 

12

 

19

 

14

 

60

 

 

13

 

14

 

6

 

33

 

 

Marketing cost of goods sold

44

 

56

 

67

 

53

 

220

 

 

41

 

28

 

23

 

92

 

 

Other cost of goods sold

 

 

 

 

 

 

 

2

 

 

2

 

 

Tracked cost of goods sold

33

 

38

 

48

 

39

 

158

 

 

28

 

25

 

46

 

99

 

 

Processing commodity expenses

5

 

2

 

3

 

6

 

16

 

 

5

 

5

 

2

 

12

 

 

Operating and administrative costs

177

 

181

 

181

 

197

 

736

 

 

168

 

198

 

176

 

542

 

 

Tracked operating and administrative costs

26

 

22

 

24

 

23

 

95

 

 

30

 

25

 

32

 

87

 

 

Other segment costs and expenses

(2

)

(15

)

(29

)

14

 

(32

)

 

1

 

2

 

(26

)

(23

)

 

Gain on sale of certain assets

 

 

 

(81

)

(81

)

 

 

 

 

 

 

Regulatory charges resulting from Tax Reform

11

 

(20

)

 

 

(9

)

 

 

 

 

 

 

Total segment costs and expenses

309

 

276

 

313

 

265

 

1,163

 

 

286

 

299

 

259

 

844

 

 

Proportional Modified EBITDA of equity-method investments

43

 

44

 

49

 

47

 

183

 

 

42

 

44

 

44

 

130

 

 

Modified EBITDA

451

 

475

 

492

 

605

 

2,023

 

 

560

 

524

 

599

 

1,683

 

 

Adjustments

15

 

(19

)

(12

)

(76

)

(92

)

 

 

35

 

12

 

47

 

 

Adjusted EBITDA

$

466

 

$

456

 

$

480

 

$

529

 

$

1,931

 

 

$

560

 

$

559

 

$

611

 

$

1,730

 

 

NGL Margin

$

10

 

$

8

 

$

12

 

$

9

 

$

39

 

 

$

7

 

$

6

 

$

5

 

$

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistics for Operated Assets

 

 

 

 

 

 

 

 

 

 

 

Gathering, Processing, and Crude Oil Transportation

 

 

 

 

 

 

 

 

 

 

 

Gathering volumes (Bcf per day) - Consolidated (1)

0.29

 

0.23

 

0.26

 

0.24

 

0.26

 

 

0.25

 

0.25

 

0.22

 

0.24

 

 

Gathering volumes (Bcf per day) - Non-consolidated (2)

0.24

 

0.25

 

0.25

 

0.31

 

0.26

 

 

0.35

 

0.38

 

0.36

 

0.36

 

 

Plant inlet natural gas volumes (Bcf per day) - Consolidated (1)

0.54

 

0.43

 

0.51

 

0.53

 

0.50

 

 

0.53

 

0.55

 

0.50

 

0.52

 

 

Plant inlet natural gas volumes (Bcf per day) - Non-consolidated (2)

0.24

 

0.25

 

0.25

 

0.32

 

0.27

 

 

0.35

 

0.39

 

0.36

 

0.36

 

 

Crude transportation volumes (Mbbls/d)

142

 

132

 

147

 

140

 

140

 

 

146

 

136

 

128

 

137

 

 

Consolidated (1)

 

 

 

 

 

 

 

 

 

 

 

Ethane margin ($/gallon)

$

.03

 

$

.16

 

$

.24

 

$

.14

 

$

.14

 

 

$

.10

 

$

.02

 

$

.01

 

$

.05

 

 

Non-ethane margin ($/gallon)

$

.66

 

$

.74

 

$

.76

 

$

.58

 

$

.68

 

 

$

.48

 

$

.28

 

$

.35

 

$

.35

 

 

NGL margin ($/gallon)

$

.40

 

$

.48

 

$

.51

 

$

.36

 

$

.43

 

 

$

.26

 

$

.17

 

$

.22

 

$

.21

 

 

Ethane equity sales (Mbbls/d)

2.82

 

1.91

 

3.05

 

2.98

 

2.69

 

 

4.16

 

4.11

 

1.85

 

3.36

 

 

Non-ethane equity sales (Mbbls/d)

3.87

 

2.35

 

3.14

 

3.21

 

3.14

 

 

3.28

 

5.34

 

3.15

 

3.92

 

 

NGL equity sales (Mbbls/d)

6.69

 

4.26

 

6.19

 

6.19

 

5.83

 

 

7.44

 

9.45

 

5.00

 

7.28

 

 

Ethane production (Mbbls/d)

12

 

12

 

15

 

16

 

14

 

 

17

 

14

 

9

 

13

 

 

Non-ethane production (Mbbls/d)

19

 

17

 

18

 

19

 

18

 

 

19

 

19

 

18

 

19

 

 

NGL production (Mbbls/d)

31

 

29

 

33

 

35

 

32

 

 

36

 

33

 

27

 

32

 

 

Non-consolidated (2)

 

 

 

 

 

 

 

 

 

 

 

NGL equity sales (Mbbls/d)

3

 

5

 

4

 

5

 

4

 

 

7

 

8

 

6

 

7

 

 

NGL production (Mbbls/d)

18

 

20

 

20

 

23

 

20

 

 

24

 

27

 

24

 

25

 

 

Transcontinental Gas Pipe Line

 

 

 

 

 

 

 

 

 

 

 

Throughput (Tbtu)

1,099.9

 

965.5

 

1,092.3

 

1,150.9

 

4,308.5

 

 

1,183.9

 

1,109.4

 

1,216.2

 

3,509.5

 

 

Avg. daily transportation volumes (Tbtu)

12.2

 

10.6

 

11.9

 

12.5

 

11.8

 

 

13.2

 

12.2

 

13.2

 

12.9

 

 

Avg. daily firm reserved capacity (Tbtu)

15.4

 

15.0

 

15.0

 

16.4

 

15.5

 

 

17.1

 

17.0

 

17.3

 

17.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Excludes volumes associated with equity-method investments that are not consolidated in our results.

 

(2) Includes 100% of the volumes associated with operated equity-method investments.

 
   

West

 

(UNAUDITED)

 

 

2018

 

2019

 

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

3rd Qtr

Year

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Service revenues:

 

 

 

 

 

 

 

 

 

 

 

Nonregulated gathering & processing fee-based revenue

$

386

 

$

398

 

$

387

 

$

335

 

$

1,506

 

 

$

319

 

$

331

 

$

282

 

$

932

 

 

Regulated transportation revenue

109

 

104

 

106

 

110

 

429

 

 

110

 

104

 

107

 

321

 

 

Other fee revenues

36

 

32

 

40

 

41

 

149

 

 

44

 

42

 

44

 

130

 

 

Nonregulated commodity consideration

82

 

78

 

97

 

64

 

321

 

 

46

 

40

 

30

 

116

 

 

Tracked service revenues

 

1

 

 

 

1

 

 

 

1

 

 

1

 

 

Product sales:

 

 

 

 

 

 

 

 

 

 

 

NGL sales from gas processing

85

 

76

 

90

 

71

 

322

 

 

48

 

41

 

31

 

120

 

 

Marketing sales

419

 

465

 

615

 

571

 

2,070

 

 

426

 

389

 

352

 

1,167

 

 

Other sales

10

 

9

 

16

 

3

 

38

 

 

1

 

1

 

2

 

4

 

 

Tracked product sales

16

 

10

 

11

 

(19

)

18

 

 

4

 

3

 

4

 

11

 

 

Total revenues

1,143

 

1,173

 

1,362

 

1,176

 

4,854

 

 

998

 

952

 

852

 

2,802

 

 

Segment costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

NGL cost of goods sold

85

 

81

 

101

 

66

 

333

 

 

49

 

41

 

32

 

122

 

 

Marketing cost of goods sold

418

 

458

 

605

 

587

 

2,068

 

 

421

 

389

 

354

 

1,164

 

 

Other cost of goods sold

7

 

8

 

12

 

2

 

29

 

 

2

 

3

 

(9

)

(4

)

 

Tracked cost of goods sold

16

 

10

 

12

 

(20

)

18

 

 

3

 

4

 

5

 

12

 

 

Processing commodity expenses

30

 

20

 

26

 

40

 

116

 

 

31

 

19

 

13

 

63

 

 

Operating and administrative costs

193

 

215

 

200

 

166

 

774

 

 

166

 

180

 

166

 

512

 

 

Tracked operating and administrative costs

 

1

 

 

 

1

 

 

 

1

 

 

1

 

 

Other segment costs and expenses

6

 

10

 

19

 

15

 

50

 

 

6

 

1

 

9

 

16

 

 

Impairment of certain assets

 

 

 

1,849

 

1,849

 

 

12

 

64

 

 

76

 

 

Gain on sale of certain assets

 

 

 

(591

)

(591

)

 

2

 

 

 

2

 

 

Regulatory charges resulting from Tax Reform

(7

)

 

 

 

(7

)

 

 

 

 

 

 

Total segment costs and expenses

748

 

803

 

975

 

2,114

 

4,640

 

 

692

 

702

 

570

 

1,964

 

 

Proportional Modified EBITDA of equity-method investments

18

 

19

 

25

 

32

 

94

 

 

26

 

28

 

29

 

83

 

 

Modified EBITDA

413

 

389

 

412

 

(906

)

308

 

 

332

 

278

 

311

 

921

 

 

Adjustments

(7

)

 

12

 

1,264

 

1,269

 

 

14

 

78

 

2

 

94

 

 

Adjusted EBITDA

$

406

 

$

389

 

$

424

 

$

358

 

$

1,577

 

 

$

346

 

$

356

 

$

313

 

$

1,015

 

 

NGL margin

$

52

 

$

53

 

$

60

 

$

29

 

$

194

 

 

$

14

 

$

21

 

$

16

 

$

51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistics for Operated Assets

 

 

 

 

 

 

 

 

 

 

 

Gathering and Processing

 

 

 

 

 

 

 

 

 

 

 

Gathering volumes (Bcf per day) - Consolidated (1)

4.58

 

4.60

 

4.48

 

3.44

 

4.27

 

 

3.42

 

3.53

 

3.62

 

3.52

 

 

Gathering volumes (Bcf per day) - Non-consolidated (2)

 

 

0.15

 

0.16

 

0.08

 

 

0.17

 

0.15

 

0.21

 

0.18

 

 

Plant inlet natural gas volumes (Bcf per day) - Consolidated (1)

2.16

 

2.12

 

2.11

 

1.65

 

2.01

 

 

1.41

 

1.52

 

1.56

 

1.49

 

 

Plant inlet natural gas volumes (Bcf per day) - Non-consolidated (2)

 

 

0.14

 

0.17

 

0.08

 

 

0.17

 

0.14

 

0.21

 

0.11

 

 

Ethane equity sales (Mbbls/d)

19.01

 

10.23

 

12.19

 

16.40

 

14.44

 

 

14.63

 

14.59

 

3.32

 

10.80

 

 

Non-ethane equity sales (Mbbls/d)

19.83

 

18.80

 

19.48

 

14.40

 

18.12

 

 

12.59

 

13.54

 

14.02

 

13.39

 

 

NGL equity sales (Mbbls/d)

38.84

 

29.03

 

31.67

 

30.80

 

32.56

 

 

27.22

 

28.13

 

17.34

 

24.19

 

 

Ethane margin ($/gallon)

$

.01

 

$

.07

 

$

.18

 

$

.02

 

$

.06

 

 

$

(.03

)

$

(.03

)

$

(.06

)

$

(.03

)

 

Non-ethane margin ($/gallon)

$

.69

 

$

.71

 

$

.69

 

$

.49

 

$

.65

 

 

$

.34

 

$

.42

 

$

.32

 

$

.36

 

 

NGL margin ($/gallon)

$

.35

 

$

.48

 

$

.49

 

$

.24

 

$

.39

 

 

$

.14

 

$

.19

 

$

.25

 

$

.19

 

 

Ethane production (Mbbls/d)

31

 

26

 

28

 

29

 

28

 

 

29

 

22

 

9

 

20

 

 

Non-ethane production (Mbbls/d) - Consolidated (1)

62

 

61

 

59

 

41

 

55

 

 

33

 

37

 

39

 

36

 

 

Non-ethane production (Mbbls/d) - Jackalope equity-method investment - 100%

 

 

5

 

5

 

3

 

 

6

 

1

 

 

2

 

 

NGL production (Mbbls/d)

93

 

87

 

92

 

75

 

86

 

 

68

 

60

 

48

 

58

 

 

NGL and Crude Transportation volumes (Mbbls) (3)

21,263

 

21,334

 

22,105

 

23,049

 

87,751

 

 

22,848

 

24,465

 

22,972

 

70,285

 

 

Northwest Pipeline LLC

 

 

 

 

 

 

 

 

 

 

 

Throughput (Tbtu)

226.1

 

188.1

 

193.5

 

212.3

 

820.0

 

 

243.5

 

184.6

 

179.2

 

607.3

 

 

Avg. daily transportation volumes (Tbtu)

2.5

 

2.1

 

2.1

 

2.3

 

2.2

 

 

2.7

 

2.0

 

1.9

 

2.2

 

 

Avg. daily firm reserved capacity (Tbtu)

3.1

 

3.1

 

3.1

 

3.1

 

3.1

 

 

3.1

 

3.0

 

3.0

 

3.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Excludes volumes associated with equity-method investments that are not consolidated in our results.

 

(2) Includes 100% of the volumes associated with operated equity-method investments, including the Jackalope Gas Gathering System and Rocky Mountain Midstream.

 

(3) Includes 100% of the volumes associated with operated equity-method investments, including the Overland Pass Pipeline Company and Rocky Mountain Midstream.

 

Northeast G&P

 

(UNAUDITED)

 

 

2018

 

2019

 

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

3rd Qtr

Year

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Service revenues:

 

 

 

 

 

 

 

 

 

 

 

Nonregulated gathering and processing fee-based revenue

$

189

 

$

196

 

$

211

 

$

226

 

$

822

 

 

$

230

 

$

267

 

$

284

 

$

781

 

 

Other fee revenues

39

 

36

 

36

 

43

 

154

 

 

46

 

63

 

69

 

178

 

 

Nonregulated commodity consideration

4

 

4

 

6

 

6

 

20

 

 

5

 

3

 

1

 

9

 

 

Product sales:

 

 

 

 

 

 

 

 

 

 

 

NGL sales from gas processing

4

 

5

 

6

 

5

 

20

 

 

5

 

3

 

 

8

 

 

Marketing sales

89

 

65

 

57

 

35

 

246

 

 

37

 

28

 

26

 

91

 

 

Tracked product sales

5

 

5

 

6

 

5

 

21

 

 

5

 

6

 

4

 

15

 

 

Total revenues

330

 

311

 

322

 

320

 

1,283

 

 

328

 

370

 

384

 

1,082

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

NGL cost of goods sold

4

 

5

 

6

 

5

 

20

 

 

5

 

3

 

 

8

 

 

Marketing cost of goods sold

90

 

65

 

57

 

36

 

248

 

 

37

 

29

 

26

 

92

 

 

Processing commodity expenses

2

 

2

 

3

 

2

 

9

 

 

3

 

2

 

1

 

6

 

 

Operating and administrative costs

85

 

91

 

96

 

108

 

380

 

 

97

 

130

 

120

 

347

 

 

Other segment costs and expenses

2

 

1

 

4

 

5

 

12

 

 

4

 

 

(3

)

1

 

 

Tracked cost of goods sold

5

 

7

 

6

 

3

 

21

 

 

5

 

6

 

3

 

14

 

 

Total segment costs and expenses

188

 

171

 

172

 

159

 

690

 

 

151

 

170

 

147

 

468

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proportional Modified EBITDA of equity-method investments

108

 

115

 

131

 

139

 

493

 

 

122

 

103

 

108

 

333

 

 

Modified EBITDA

250

 

255

 

281

 

300

 

1,086

 

 

299

 

303

 

345

 

947

 

 

Adjustments

 

 

 

4

 

4

 

 

3

 

16

 

(2

)

17

 

 

Adjusted EBITDA

$

250

 

$

255

 

$

281

 

$

304

 

$

1,090

 

 

$

302

 

$

319

 

$

343

 

$

964

 

 

NGL margin

$

2

 

$

2

 

$

3

 

$

4

 

$

11

 

 

$

2

 

$

1

 

$

 

$

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistics for Operated Assets

 

 

 

 

 

 

 

 

 

 

 

Gathering and Processing

 

 

 

 

 

 

 

 

 

 

 

Gathering volumes (Bcf per day) - Consolidated (1)

3.38

 

3.45

 

3.67

 

4.02

 

3.63

 

 

4.05

 

4.16

 

4.33

 

4.18

 

 

Gathering volumes (Bcf per day) - Non-consolidated (2)

3.82

 

3.59

 

3.73

 

3.89

 

3.76

 

 

4.27

 

4.08

 

4.35

 

4.23

 

 

Plant inlet natural gas volumes (Bcf per day)

0.49

 

0.55

 

0.52

 

0.52

 

0.52

 

 

0.63

 

1.04

 

1.16

 

0.94

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ethane equity sales (Mbbls/d)

1.33

 

3.17

 

2.74

 

2.80

 

2.52

 

 

2.73

 

1.83

 

1.94

 

2.16

 

 

Non-ethane equity sales (Mbbls/d)

0.79

 

1.09

 

1.49

 

1.28

 

1.16

 

 

1.21

 

1.09

 

0.67

 

0.99

 

 

NGL equity sales (Mbbls/d)

2.12

 

4.26

 

4.23

 

4.08

 

3.68

 

 

3.94

 

2.92

 

2.61

 

3.15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ethane production (Mbbls/d)

23

 

27

 

26

 

20

 

24

 

 

22

 

24

 

24

 

23

 

 

Non-ethane production (Mbbls/d)

21

 

21

 

23

 

22

 

22

 

 

22

 

34

 

54

 

37

 

 

NGL production (Mbbls/d)

44

 

48

 

49

 

42

 

46

 

 

44

 

58

 

78

 

60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes gathering volumes associated with Susquehanna Supply Hub, the Northeast JV, and Utica Supply Hub, all of which are consolidated.

 

(2) Includes 100% of the volumes associated with operated equity-method investments, including the Laurel Mountain Midstream partnership; and the Bradford Supply Hub and a portion of the Marcellus South Supply Hub within the Appalachia Midstream Services partnership. Volumes handled by Blue Racer Midstream (gathering and processing), which we do not operate, are not included.

 

Capital Expenditures and Investments

 

(UNAUDITED)

 

 

2018

 

2019

 

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

3rd Qtr

Year

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

 

 

 

 

Northeast G&P

$

114

 

$

104

 

$

114

 

$

139

 

$

471

 

 

$

152

 

$

177

 

$

131

 

$

460

 

 

Atlantic-Gulf

764

 

746

 

549

 

359

 

2,418

 

 

193

 

234

 

497

 

924

 

 

West

69

 

74

 

96

 

93

 

332

 

 

69

 

80

 

153

 

302

 

 

Other

10

 

9

 

10

 

6

 

35

 

 

8

 

6

 

5

 

19

 

 

Total (1)

$

957

 

$

933

 

$

769

 

$

597

 

$

3,256

 

 

$

422

 

$

497

 

$

786

 

$

1,705

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of investments:

 

 

 

 

 

 

 

 

 

 

 

Northeast G&P

$

20

 

$

70

 

$

114

 

$

58

 

$

262

 

 

$

47

 

$

61

 

$

34

 

$

142

 

 

Atlantic-Gulf

1

 

 

5

 

 

6

 

 

 

12

 

3

 

15

 

 

West

 

 

593

 

271

 

864

 

 

52

 

70

 

82

 

204

 

 

Total

$

21

 

$

70

 

$

712

 

$

329

 

$

1,132

 

 

$

99

 

$

143

 

$

119

 

$

361

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary:

 

 

 

 

 

 

 

 

 

 

 

Northeast G&P

$

134

 

$

174

 

$

228

 

$

197

 

$

733

 

 

$

199

 

$

238

 

$

165

 

$

602

 

 

Atlantic-Gulf

765

 

746

 

554

 

359

 

2,424

 

 

193

 

246

 

500

 

939

 

 

West

69

 

74

 

689

 

364

 

1,196

 

 

121

 

150

 

235

 

506

 

 

Other

10

 

9

 

10

 

6

 

35

 

 

8

 

6

 

5

 

19

 

 

Total

$

978

 

$

1,003

 

$

1,481

 

$

926

 

$

4,388

 

 

$

521

 

$

640

 

$

905

 

$

2,066

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital investments:

 

 

 

 

 

 

 

 

 

 

 

Increases to property, plant, and equipment

$

934

 

$

930

 

$

618

 

$

539

 

$

3,021

 

 

$

418

 

$

559

 

$

730

 

$

1,707

 

 

Purchases of businesses, net of cash acquired

 

 

 

 

 

 

727

 

 

1

 

728

 

 

Purchases of investments

21

 

70

 

712

 

329

 

1,132

 

 

99

 

143

 

119

 

361

 

 

Total

$

955

 

$

1,000

 

$

1,330

 

$

868

 

$

4,153

 

 

$

1,244

 

$

702

 

$

850

 

$

2,796

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Increases to property, plant, and equipment

$

934

 

$

930

 

$

618

 

$

539

 

$

3,021

 

 

$

418

 

$

559

 

$

730

 

$

1,707

 

 

Changes in related accounts payable and accrued liabilities

23

 

3

 

151

 

58

 

235

 

 

4

 

(62

)

56

 

(2

)

 

Capital expenditures

$

957

 

$

933

 

$

769

 

$

597

 

$

3,256

 

 

$

422

 

$

497

 

$

786

 

$

1,705

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contributions from noncontrolling interests

$

3

 

$

8

 

$

2

 

$

2

 

$

15

 

 

$

4

 

$

28

 

$

 

$

32

 

 

Contributions in aid of construction

$

190

 

$

149

 

$

56

 

$

16

 

$

411

 

 

$

10

 

$

8

 

$

7

 

$

25

 

 

Proceeds from sale of businesses, net of cash divested

$

 

$

 

$

 

$

1,296

 

$

1,296

 

 

$

(2

)

$

 

$

 

$

(2

)

 

Proceeds from sale of partial interest in consolidated subsidiary

$

 

$

 

$

 

$

 

$

 

 

$

 

$

1,330

 

$

 

$

1,330

 

 

Proceeds from disposition of equity-method investments

$

 

$

 

$

 

$

 

$

 

 

$

 

$

485

 

$

 

$

485

 

 

Non-GAAP Measures

This news release and accompanying materials may include certain financial measures – Adjusted EBITDA, adjusted income (“earnings”), adjusted earnings per share, distributable cash flow and dividend coverage ratio – that are non-GAAP financial measures as defined under the rules of the SEC.

Our segment performance measure, Modified EBITDA, is defined as net income (loss) before income (loss) from discontinued operations, income tax expense, net interest expense, equity earnings from equity-method investments, other net investing income, impairments of equity investments and goodwill, depreciation and amortization expense, and accretion expense associated with asset retirement obligations for nonregulated operations. We also add our proportional ownership share (based on ownership interest) of Modified EBITDA of equity-method investments.

Adjusted EBITDA further excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Management believes this measure provides investors meaningful insight into results from ongoing operations.

Distributable cash flow is defined as Adjusted EBITDA less maintenance capital expenditures, cash portion of net interest expense, income attributable to or dividends/ distributions paid to noncontrolling interests and cash income taxes, and certain other adjustments that management believes affects the comparability of results. Adjustments for maintenance capital expenditures and cash portion of interest expense include our proportionate share of these items of our equity-method investments. We also calculate the ratio of distributable cash flow to the total cash dividends paid (dividend coverage ratio). This measure reflects Williams’ distributable cash flow relative to its actual cash dividends paid.

This news release is accompanied by a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are accepted financial indicators used by investors to compare company performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of assets and the cash that the business is generating.

Neither Adjusted EBITDA, adjusted income, nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income or cash flow from operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.

   

Reconciliation of Income (Loss) Attributable to The Williams Companies, Inc. to Adjusted Income

 

(UNAUDITED)

 

 

2018

 

2019

 

(Dollars in millions, except per-share amounts)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

3rd Qtr

Year

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) attributable to The Williams Companies, Inc. available to common stockholders

$

152

 

$

135

 

$

129

 

$

(572

)

$

(156

)

 

$

194

 

$

310

 

$

220

 

$

724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) - diluted earnings (loss) per common share (1)

$

.18

 

$

.16

 

$

.13

 

$

(.47

)

$

(.16

)

 

$

.16

 

$

.26

 

$

.18

 

$

.60

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

Northeast G&P

 

 

 

 

 

 

 

 

 

 

 

Expenses associated with new venture

$

 

$

 

$

 

$

 

$

 

 

$

3

 

$

6

 

$

1

 

$

10

 

 

Settlement charge from pension early payout program

 

 

 

4

 

4

 

 

 

 

 

 

 

Severance and related costs

 

 

 

 

 

 

 

10

 

(3

)

7

 

 

Total Northeast G&P adjustments

 

 

 

4

 

4

 

 

3

 

16

 

(2

)

17

 

 

Atlantic-Gulf

 

 

 

 

 

 

 

 

 

 

 

Constitution Pipeline project development costs

2

 

1

 

1

 

 

4

 

 

 

1

 

1

 

2

 

 

Settlement charge from pension early payout program

 

 

 

7

 

7

 

 

 

 

 

 

 

Regulatory adjustments resulting from Tax Reform

11

 

(20

)

 

 

(9

)

 

 

 

 

 

 

Benefit of regulatory asset associated with increase in Transco’s estimated deferred state income tax rate following WPZ Merger

 

 

(3

)

 

(3

)

 

 

 

 

 

 

Share of regulatory charges resulting from Tax Reform for equity-method investments

2

 

 

 

 

2

 

 

 

 

 

 

 

Reversal of expenditures capitalized in prior years

 

 

 

 

 

 

 

15

 

 

15

 

 

Gain on sale of certain Gulf Coast pipeline assets

 

 

 

(81

)

(81

)

 

 

 

 

 

 

Gain on asset retirement

 

 

(10

)

(2

)

(12

)

 

 

 

 

 

 

Severance and related costs

 

 

 

 

 

 

 

19

 

11

 

30

 

 

Total Atlantic-Gulf adjustments

15

 

(19

)

(12

)

(76

)

(92

)

 

 

35

 

12

 

47

 

 

West

 

 

 

 

 

 

 

 

 

 

 

Impairment of certain assets

 

 

 

1,849

 

1,849

 

 

12

 

64

 

 

76

 

 

Settlement charge from pension early payout program

 

 

 

6

 

6

 

 

 

 

 

 

 

Regulatory adjustments resulting from Tax Reform

(7

)

 

 

 

(7

)

 

 

 

 

 

 

Charge for regulatory liability associated with the decrease in Northwest Pipeline’s estimated deferred state income tax rates following WPZ Merger

 

 

12

 

 

12

 

 

 

 

 

 

 

Gain on sale of Four Corners assets

 

 

 

(591

)

(591

)

 

2

 

 

 

2

 

 

Severance and related costs

 

 

 

 

 

 

 

14

 

2

 

16

 

 

Total West adjustments

(7

)

 

12

 

1,264

 

1,269

 

 

14

 

78

 

2

 

94

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Loss on early retirement of debt

7

 

 

 

 

7

 

 

 

 

 

 

 

Impairment of certain assets

 

66

 

 

 

66

 

 

 

 

 

 

 

Settlement charge from pension early payout program

 

 

 

5

 

5

 

 

 

 

 

 

 

Regulatory adjustments resulting from Tax Reform

 

1

 

 

 

1

 

 

 

 

 

 

 

(Benefit) adjustment of regulatory assets associated with increase in Transco’s estimated deferred state income tax rate following WPZ Merger

 

 

(45

)

 

(45

)

 

12

 

 

 

12

 

 

WPZ Merger costs

 

4

 

15

 

1

 

20

 

 

 

 

 

 

 

Gain on sale of certain Gulf Coast pipeline systems

 

 

 

(20

)

(20

)

 

 

 

 

 

 

Charitable contribution of preferred stock to Williams Foundation

 

 

35

 

 

35

 

 

 

 

 

 

 

Accrual for loss contingencies associated with former operations

 

 

 

 

 

 

 

 

9

 

9

 

 

Total Other adjustments

7

 

71

 

5

 

(14

)

69

 

 

12

 

 

9

 

21

 

 

Adjustments included in Modified EBITDA

15

 

52

 

5

 

1,178

 

1,250

 

 

29

 

129

 

21

 

179

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments below Modified EBITDA

 

 

 

 

 

 

 

 

 

 

 

Gain on deconsolidation of Jackalope interest

 

(62

)

 

 

(62

)

 

 

 

 

 

 

Gain on deconsolidation of certain Permian assets

 

 

 

(141

)

(141

)

 

2

 

 

 

2

 

 

Impairment of equity-method investments

 

 

 

32

 

32

 

 

74

 

(2

)

114

 

186

 

 

Gain on sale of equity-method investments

 

 

 

 

 

 

 

(122

)

 

(122

)

 

Allocation of adjustments to noncontrolling interests

(5

)

21

 

 

 

16

 

 

 

(1

)

 

(1

)

 

 

(5

)

(41

)

 

(109

)

(155

)

 

76

 

(125

)

114

 

65

 

 

Total adjustments

10

 

11

 

5

 

1,069

 

1,095

 

 

105

 

4

 

135

 

244

 

 

Less tax effect for above items

(3

)

(3

)

(1

)

(267

)

(274

)

 

(26

)

(1

)

(34

)

(61

)

 

Adjustments for tax-related items (2)

 

 

110

 

 

110

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted income available to common stockholders

$

159

 

$

143

 

$

243

 

$

230

 

$

775

 

 

$

273

 

$

313

 

$

321

 

$

907

 

 

Adjusted diluted earnings per common share (1)

$

.19

 

$

.17

 

$

.24

 

$

.19

 

$

.79

 

 

$

.22

 

$

.26

 

$

.26

 

$

.75

 

 

Weighted-average shares - diluted (thousands)

830,197

 

830,107

 

1,026,504

 

1,212,822

 

976,097

 

 

1,213,592

 

1,214,065

 

1,214,165

 

1,213,943

 

 

(1) The sum of earnings per share for the quarters may not equal the total earnings per share for the year due to changes in the weighted-average number of common shares outstanding.

 

(2) The third quarter of 2018 reflects tax adjustments driven by the WPZ Merger, primarily a valuation allowance for foreign tax credits.

 

   

Reconciliation of Distributable Cash Flow (DCF)

 

(UNAUDITED)

 

 

2018

 

2019

(Dollars in millions, except coverage ratios)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

3rd Qtr

Year

 

 

 

 

 

 

 

 

 

 

 

 

 

The Williams Companies, Inc.

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP "Net Income (Loss)" to Non-GAAP "Modified EBITDA", "Adjusted EBITDA" and "Distributable cash flow"

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

270

 

$

269

 

$

200

 

$

(546

)

$

193

 

 

$

214

 

$

324

 

$

242

 

$

780

 

 

Provision (benefit) for income taxes

55

 

52

 

190

 

(159

)

138

 

 

69

 

98

 

77

 

244

 

 

Interest expense

273

 

275

 

270

 

294

 

1,112

 

 

296

 

296

 

296

 

888

 

 

Equity (earnings) losses

(82

)

(92

)

(105

)

(117

)

(396

)

 

(80

)

(87

)

(93

)

(260

)

 

Other investing (income) loss - net

(4

)

(68

)

(2

)

(113

)

(187

)

 

73

 

(126

)

107

 

54

 

 

Proportional Modified EBITDA of equity-method investments

169

 

178

 

205

 

218

 

770

 

 

190

 

175

 

181

 

546

 

 

Depreciation and amortization expenses

431

 

434

 

425

 

435

 

1,725

 

 

416

 

424

 

435

 

1,275

 

 

Accretion for asset retirement obligations associated with nonregulated operations

8

 

10

 

8

 

7

 

33

 

 

9

 

8

 

8

 

25

 

 

Modified EBITDA

1,120

 

1,058

 

1,191

 

19

 

3,388

 

 

1,187

 

1,112

 

1,253

 

3,552

 

 

EBITDA adjustments

15

 

52

 

5

 

1,178

 

1,250

 

 

29

 

129

 

21

 

179

 

 

Adjusted EBITDA

1,135

 

1,110

 

1,196

 

1,197

 

4,638

 

 

1,216

 

1,241

 

1,274

 

3,731

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maintenance capital expenditures (1)

(110

)

(160

)

(138

)

(122

)

(530

)

 

(93

)

(130

)

(128

)

(351

)

 

Preferred dividends