Williams Partners Reports Strong Third-Quarter 2016 Financial Results

  • Continued Solid Financial Performance; Increasing Fee-Based Revenue; Cost Reductions
  • 3Q 2016 Cash Flow from Operations of $676 million, Up $71 million or 12%
  • 3Q 2016 Net Income of $326 million, Up $520 million
  • 3Q 2016 Adjusted EBITDA of $1.189 billion, Up $89 million or 8%
  • Coverage Ratio of 1.08x Driven by Distributable Cash Flow of $795 million, Up $41 million or 5%
  • Revised 2017 Capital Expenditure Guidance Related Primarily to Atlantic Sunrise Project Timing
Monday, October 31, 2016 6:45 am EDT

Dateline:

TULSA, Okla.

TULSA, Okla.--(BUSINESS WIRE)--Williams Partners L.P. (NYSE:WPZ) today announced its financial results for the three and nine months ended Sept. 30, 2016.

             
Summary Financial Information  3Q  YTD

Amounts in millions, except per-unit amounts. Per unit amounts
are reported on a diluted basis. All amounts are attributable
to Williams Partners L.P.

  2016  2015   2016   2015 
             
             
GAAP Measures            
Cash Flow from Operations  $676  $605   $2,341   $2,098 
Net income (loss)  $326  ($194)  $286   $195 
Net income (loss) per common unit  $0.42  ($0.32)  ($0.32)  ($0.50)
             
Non-GAAP Measures (1)            
Adjusted EBITDA  $1,189  $1,100   $3,314   $3,025 
DCF attributable to partnership operations  $795  $754   $2,271   $2,101 
Cash distribution coverage ratio  1.08x  1.04x  1.04x  0.97x
             

(1)

Adjusted EBITDA, distributable cash flow (DCF) and cash distribution coverage ratio are non-GAAP measures. Reconciliations to the most relevant measures included in GAAP are attached to this news release.

Third-Quarter 2016 Financial Results

Williams Partners reported third-quarter 2016 unaudited net income of $326 million, compared to a $194 million net loss from third-quarter 2015. The favorable change was driven by the absence of $461 million of impairments of equity-method investments recognized in 2015. The improvement also reflected higher olefins margins at our Geismar plant, lower operating and maintenance (O&M) and selling, general and administrative (SG&A) expenses, and higher service revenues associated with expansion projects, partially offset by a $32 million additional loss associated with the completion of the sale of our Canadian operations and expensed project development costs.

Year-to-date, Williams Partners reported unaudited net income of $286 million, a $91 million increase over the same time period in 2015. The favorable change was driven by lower impairments of equity-method investments, higher service revenues, an increase in olefins margins associated with our Geismar plant, decreases in O&M and SG&A expenses, and higher equity earnings. These favorable changes were partially offset by increased property-impairment charges and the additional loss on sale associated with our Canadian operations, the absence of $126 million of insurance recoveries, and higher interest incurred.

Williams Partners reported third-quarter 2016 Adjusted EBITDA of $1.189 billion, an $89 million increase over third-quarter 2015. The increase is due primarily to $37 million higher fee-based revenues, $33 million higher olefins margins and $21 million lower O&M and SG&A expenses.

Year-to-date, Williams Partners reported Adjusted EBITDA of $3.314 billion, an increase of $289 million over the same nine-month reporting period in 2015. The increase is due primarily to $108 million of higher olefins margins, $99 million of higher fee-based revenues, $83 million of lower O&M and SG&A expenses and $50 million of higher proportional EBITDA from joint ventures. Partially offsetting these increases was a $19 million unfavorable change in foreign currency exchange gains and losses related to our former Canadian operations divested in September 2016.

Distributable Cash Flow and Distributions

For third-quarter 2016, Williams Partners generated $795 million in distributable cash flow (DCF) attributable to partnership operations, compared with $754 million in DCF attributable to partnership operations for the same period last year. The $41 million increase in DCF for the quarter was driven by an $89 million increase in Adjusted EBITDA, partially offset by $25 million higher interest expense. For third-quarter 2016, the cash distribution coverage was 1.08x.

Year-to-date, Williams Partners generated $2.271 billion in DCF, an increase of $170 million over the same period in 2015. The increase was due to a $289 million increase in Adjusted EBITDA partially offset by $100 million higher interest expense. Year-to-date, the cash distribution coverage was 1.04x.

Williams Partners recently announced a regular quarterly cash distribution of $0.85 per unit for its common unitholders payable on Nov. 14, 2016 to unitholders of record at the close of business on Nov. 4, 2016.

In August 2016, Williams reinvested $250 million via a private placement to purchase WPZ common units pursuant to its previously announced plans.

CEO Perspective

Alan Armstrong, chief executive officer of Williams Partners’ general partner, made the following comments:

“With Adjusted EBITDA growth across all five of the partnership’s operating areas and increased distributable cash flow achieved by Williams Partners, our strong third-quarter results highlighted once again the effectiveness of our strategy and how well-positioned we are to capture natural gas demand growth now and in the future.

“Our recent accomplishments reflect disciplined execution against our business plan. The new Kodiak, Gunflint and Rock Springs facilities all contributed to our growth in the third quarter. Despite the expanding number of major projects recently placed in-service, we reduced expenses on a year-to-date basis. We also completed win-win contract renegotiations with our customer Chesapeake and completed the sale of our Canadian businesses as we continue to take decisive actions to position our company for predictable growth.

“Our future growth is also visible in the number of projects now under construction. After receiving the necessary permits to begin construction, we began work in the third quarter on Dalton, Virginia Southside II and Phase 1 of Hillabee. Construction on our New York Bay Expansion project began this month while construction also continues on our Gulf Trace project. We are aiming to place all of these Transco-expansion projects into service next year.”

Business Segment Results

    
Williams Partners  Modified and Adjusted EBITDA
Amounts in millions  3Q 2016 3Q 2016  3Q 2015 3Q 2015  YTD 2016  YTD 2015
   

Modified
EBITDA

 Adjust. 

Adjusted
EBITDA

  

Modified
EBITDA

 Adjust. 

Adjusted
EBITDA

  

Modified
EBITDA

 Adjust. 

Adjusted
EBITDA

  

Modified
EBITDA

 Adjust. 

Adjusted
EBITDA

Atlantic-Gulf  $416 $11 $427  $414 $ -  $414  $1,149  $42 $1,191  $1,138 $ -  $1,138
Central  176 70 246  163 67  230  467  251 718  456 224  680
NGL & Petchem Services  104 32 136  85 -  85  (104) 377 273  249 (124) 125
Northeast G&P  208 6 214  189 19  208  638  11 649  557 52  609
West  166 - 166  169 (8) 161  479  4 483  480 (7) 473
Other  - - -  1 1  2  -  - -  11 (11) -
Total  $1,070 $119 $1,189  $1,021 $79  $1,100  $2,629  $685 $3,314  $2,891 $134  $3,025
                             
Definitions of modified EBITDA and adjusted EBITDA and schedules reconciling these measures to net income are included in this news release.
 

Atlantic-Gulf

Atlantic-Gulf operating area includes the Transco interstate gas pipeline and 41 percent interest in Constitution interstate gas pipeline development project, which Williams Partners consolidates. The segment also includes the partnership’s significant natural gas gathering and processing and crude oil production and handling and transportation in the Gulf Coast region. These operations include a 51 percent consolidated interest in Gulfstar One, a 50 percent equity method interest in Gulfstream and a 60 percent equity-method interest in the Discovery pipeline and processing system.

Atlantic-Gulf reported Modified EBITDA of $416 million for third-quarter 2016, compared with $414 million for third-quarter 2015. Adjusted EBITDA increased by $13 million to $427 million for the same time period. The increase in Modified EBITDA is due primarily to $31 million higher fee-based revenues from both offshore gathering and processing operations (including the new Gunflint and Kodiak facilities) as well as Transco’s new expansion projects. Substantially offsetting the higher fee-based revenues were $20 million in higher O&M expenses primarily related to pipeline safety testing activities as well as expensed project development costs.

Year-to-date, Atlantic-Gulf reported Modified EBITDA of $1.149 billion, an increase of $11 million over the same time period in 2015. Adjusted EBITDA increased $53 million to $1.191 billion. The increase in Modified EBITDA was due primarily to $27 million higher fee-based revenues from both Transco’s new expansion projects as well as offshore gathering and processing operations (including the new Gunflint and Kodiak facilities) and $25 million higher proportional EBITDA from Discovery due to increased contributions from Keathley Canyon Connector. Modified EBITDA was also unfavorably impacted by potential rate refunds associated with litigation, severance-related costs, and project development costs, all of which are excluded from Adjusted EBITDA.

Central

The Central operating area includes operations that were previously part of the former Access Midstream segment located in Louisiana, Texas, Arkansas and Oklahoma. These operations became the Central operating area effective Jan. 1, 2016 and prior-period segment disclosures have been recast for this change. Central provides gathering, treating and compression services to producers under long-term, fee-based contracts. The segment also includes a non-operated 50 percent interest in the Delaware Basin gas gathering system in the Mid-Continent region.

The Central operating area reported Modified EBITDA of $176 million for third-quarter 2016, an increase of $13 million from third-quarter 2015. Adjusted EBITDA increased by $16 million to $246 million. The increase is due primarily to $20 million lower O&M and SG&A expenses partially offset by lower fee-based revenues.

Year-to-date, the Central operating area reported Modified EBITDA of $467 million, an increase of $11 million from the same nine-month reporting period in 2015. Adjusted EBITDA increased $38 million to $718 million. The increase in Modified EBITDA was due primarily to $63 million of lower O&M and SG&A expenses due to cost reduction efforts and the absence of certain merger and transition costs in the prior year partially offset by lower fee-based revenues and a $48 million impairment charge in the second quarter of 2016 related to a gathering system. Adjusted EBITDA excludes the impairment charge and benefits from the absence of prior-year merger and transition costs, as well as estimated minimum volume commitments.

NGL & Petchem Services

NGL & Petchem Services operating area includes an 88.5 percent undivided ownership interest in an olefins production facility in Geismar, Louisiana, along with a refinery grade propylene splitter and pipelines in the Gulf Coast region. This segment also includes the partnership’s energy commodities marketing business, an NGL fractionator and storage facilities near Conway, Kan. and a 50 percent equity-method interest in Overland Pass Pipeline. Prior to the sale of all of our Canadian-based assets effective Sept. 23, 2016, this segment included midstream operations in Alberta, Canada, including an oil sands offgas processing plant near Fort McMurray, 261 miles of NGL and olefins pipelines and an NGL/olefins fractionation facility at Redwater.

NGL & Petchem Services operating area reported Modified EBITDA of $104 million for third-quarter 2016, compared with $85 million for third-quarter 2015. Adjusted EBITDA increased by $51 million to $136 million. The $19 million increase in Modified EBITDA was due primarily to $33 million higher olefins margins and $8 million higher fee-based revenues. Geismar olefins margins for third-quarter 2016 reflected enhanced operational production levels and improved ethylene prices. Partially offsetting these increases was a $32 million additional loss associated with the completion of the sale of Canadian operations, which is excluded from Adjusted EBITDA.

Year-to-date, NGL & Petchem Services operating area reported Modified EBITDA of ($104) million compared with $249 million during the same time period in 2015. Adjusted EBITDA increased $148 million to $273 million. The decrease in Modified EBITDA was due primarily to a second quarter 2016 non-cash impairment charge of $341 million associated with our former Canadian operations, the additional loss associated with the sale, and the absence of $126 million business interruption proceeds. Partially offsetting these unfavorable items were $108 million favorable olefins margins at Geismar and $38 million favorable fee-based revenues due primarily to new fees associated with Williams’ Canadian offgas processing plant that came online in first quarter 2016. Adjusted EBITDA excludes the impairment charge, additional loss on sale and insurance proceeds.

Northeast G&P

Northeast G&P operating area includes the Susquehanna Supply Hub, Ohio Valley Midstream, Marcellus South, Bradford and Utica midstream gathering and processing operations as well as its 69-percent equity investment in Laurel Mountain Midstream, and its 58.4 percent equity investment in Caiman Energy II. Caiman Energy II owns a 50 percent interest in Blue Racer Midstream. The Marcellus South, Bradford and Utica midstream gathering and processing operations that were previously within the former Access Midstream segment became part of Northeast G&P effective Jan. 1, 2016 and prior period segment disclosures have been recast for this change.

Northeast G&P operating area reported Modified EBITDA of $208 million for third-quarter 2016, compared with $189 million for third-quarter 2015. Adjusted EBITDA increased $6 million to $214 million. The $19 million increase in Modified EBITDA was due primarily to $14 million of higher fee-based revenues.

Year-to-date, Northeast G&P operating area reported Modified EBITDA of $638 million, an increase of $81 million over the same period in 2015. Adjusted EBITDA increased $40 million to $649 million. The increase in Modified EBITDA is due primarily to higher fee-based revenues, lower O&M expenses, increased proportional Modified EBITDA of equity-method investments and the absence of certain 2015 impairment charges. Adjusted EBITDA excludes the prior year impairment charges.

West

West operating area includes the partnership’s Northwest Pipeline interstate gas pipeline system, as well as gathering, processing and treating operations in Wyoming, the Piceance Basin and the Four Corners area.

West operating area reported Modified EBITDA of $166 million for third-quarter 2016, compared with $169 million for third-quarter 2015. Adjusted EBITDA of $166 million is $5 million higher than the same period in 2015. The $3 million decrease in Modified EBITDA was due primarily to the absence of an $8 million insurance settlement recorded in 2015 and lower fee-based revenues, substantially offset by $7 million lower O&M and SG&A expenses. Adjusted EBITDA excludes the effect of the 2015 insurance settlement.

Year-to-date, the West operating area reported Modified EBITDA of $479 million compared with $480 million over the same period in 2015. Adjusted EBITDA of $483 million is $10 million higher than the same period in 2015 due primarily to lower O&M and SG&A expenses.

Revised 2017 Growth Capital Guidance Related Primarily to Atlantic Sunrise Project Timing

Williams Partners is revising its 2017 growth capital guidance amounts due primarily to the shift in Transco and related Northeast G&P growth spending caused by the revised Atlantic Sunrise in-service date, as well as new projects and other changes. As discussed in its press release dated Oct. 28, 2016, Williams Partners expects partial Atlantic Sunrise service to begin during the second half of 2017 and is now targeting full in-service during mid-2018. Consistent with prior financial practice, Williams Partners’ financial plan further risks these project cash flows by approximately six months. The following guidance range represents both the targeted in-service date and the further risked in-service date: total 2017 growth capital and investment expenditures are expected to be between $2.1 billion and $2.8 billion, including total 2017 growth capital for Transco, which is expected to be between $1.4 billion and $1.9 billion.

Third-Quarter 2016 Materials to be Posted Shortly; Q&A Webcast Scheduled for This Morning

Williams Partners’ third-quarter 2016 financial results package will be posted shortly at www.williams.com. The package will include the data book and analyst package.

Williams and Williams Partners plan to jointly host a Q&A live webcast today, Oct. 31, at 9:30 a.m. EDT. A limited number of phone lines will be available at (888) 364-3105. International callers should dial (719) 8325-2228. The conference ID is 6961753. A link to the webcast, as well as replays of the webcast, will be available for two weeks following the event at www.williams.com.

Form 10-Q

The company plans to file its third-quarter 2016 Form 10-Q with the Securities and Exchange Commission this week. Once filed, the document will be available on both the SEC and Williams websites.

Definitions of Non-GAAP Measures

This news release may include certain financial measures – adjusted EBITDA, distributable cash flow and cash distribution coverage ratio – that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission.

Our segment performance measure, modified EBITDA, is defined as net income (loss) before 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 and may include assumed business interruption insurance related to the Geismar plant. Management believes these measures provide investors meaningful insight into results from ongoing operations.

We define distributable cash flow as adjusted EBITDA less maintenance capital expenditures, cash portion of interest expense, income attributable to noncontrolling interests and cash income taxes, plus WPZ restricted stock unit non-cash compensation expense 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 distributed (cash distribution coverage ratio). This measure reflects the amount of distributable cash flow relative to our cash distribution. We have also provided this ratio using the most directly comparable GAAP measure, net income (loss).

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 the Partnership's assets and the cash that the business is generating.

Neither adjusted EBITDA 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.

About Williams Partners

Williams Partners (NYSE:WPZ) is an industry-leading, large-cap natural gas infrastructure master limited partnership with a strong growth outlook and major positions in key U.S. supply basins. Williams Partners has operations across the natural gas value chain from gathering, processing and interstate transportation of natural gas and natural gas liquids to petchem production of ethylene, propylene and other olefins. Williams Partners owns and operates more than 33,000 miles of pipelines system wide – including the nation’s largest volume and fastest growing pipeline – providing natural gas for clean-power generation, heating and industrial use. Williams Partners’ operations touch approximately 30 percent of U.S. natural gas. Tulsa, Okla.-based Williams (NYSE:WMB), a premier provider of large-scale U.S. natural gas infrastructure, owns 60 percent of Williams Partners, including all of the 2 percent general-partner interest. www.williams.com

Forward-Looking Statements

The reports, filings, and other public announcements of Williams Partners L.P. (WPZ) may contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions and other matters.

All statements, other than statements of historical facts, included in this report that address activities, events or developments that we expect, believe or anticipate will exist or may occur in the future, are forward-looking statements. Forward-looking statements can be identified by various forms of words such as “anticipates,” “believes,” “seeks,” “could,” “may,” “should,” “continues,” “estimates,” “expects,” “forecasts,” “intends,” “might,” “goals,” “objectives,” “targets,” “planned,” “potential,” “projects,” “scheduled,” “will,” “assumes,” “guidance,” “outlook,” “in service date” or other similar expressions. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to management and include, among others, statements regarding:

Expected levels of cash distributions with respect to general partner interests, incentive distribution rights and limited partner interests;

Our and our affiliates’ future credit ratings;

Amounts and nature of future capital expenditures;

Expansion of our business and operations;

Financial condition and liquidity;

Business strategy;

Cash flow from operations or results of operations;

Seasonality of certain business components;

Natural gas, natural gas liquids, and olefins prices, supply, and demand;

Demand for our services.

Forward-looking statements are based on numerous assumptions, uncertainties and risks that could cause future events or results to be materially different from those stated or implied in this report. Many of the factors that will determine these results are beyond our ability to control or predict. Specific factors that could cause actual results to differ from results contemplated by the forward-looking statements include, among others, the following:

Whether we have sufficient cash from operations to enable us to pay current and expected levels of cash distributions, if any, following the establishment of cash reserves and payment of fees and expenses, including payments to our general partner;

Whether we will be able to effectively execute our financing plan including the receipt of anticipated levels of proceeds from planned asset sales;

Availability of supplies, including lower than anticipated volumes from third parties served by our midstream business, and market demand;

Volatility of pricing including the effect of lower than anticipated energy commodity prices and margins;

Inflation, interest rates, fluctuation in foreign exchange rates and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on customers and suppliers)

The strength and financial resources of our competitors and the effects of competition;

Whether we are able to successfully identify, evaluate and timely execute our capital projects and other investment opportunities in accordance with our forecasted capital expenditures budget;

Our ability to successfully expand our facilities and operations;

Development of alternative energy sources;

Availability of adequate insurance coverage and the impact of operational and developmental hazards and unforeseen interruptions;

The impact of existing and future laws, regulations, the regulatory environment, environmental liabilities, and litigation as well as our ability to obtain permits and achieve favorable rate proceeding outcomes;

Williams’ costs and funding obligations for defined benefit pension plans and other postretirement benefit plans;

Our allocated costs for defined benefit pension plans and other postretirement benefit plans sponsored by our affiliates;

Changes in maintenance and construction costs;

Changes in the current geopolitical situation;

Our exposure to the credit risk of our customers and counterparties;

Risks related to financing, including restrictions stemming from debt agreements, future changes in credit ratings as determined by nationally-recognized credit rating agencies and the availability and cost of capital;

The amount of cash distributions from, and capital requirements of, our investments and joint ventures in which we participate;

Risks associated with weather and natural phenomena, including climate conditions and physical damage to our facilities;

Acts of terrorism, including cybersecurity threats and related disruptions;

Additional risks described in our filings with the SEC.

Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement, we caution investors not to unduly rely on our forward-looking statements. We disclaim any obligations to and do not intend to update the above list or announce publicly the result of any revisions to any of the forward-looking statements to reflect future events or developments.

In addition to causing our actual results to differ, the factors listed above and referred to below may cause our intentions to change from those statements of intention set forth in this report. Such changes in our intentions may also cause our results to differ. We may change our intentions, at any time and without notice, based upon changes in such factors, our assumptions, or otherwise.

Limited partner units are inherently different from the capital stock of a corporation, although many of the business risks to which we are subject are similar to those that would be faced by a corporation engaged in a similar business. You should carefully consider the risk factors discussed below in addition to the other information in this report. If any of the following risks were actually to occur, our business, results of operations and financial condition could be materially adversely affected. In that case, we might not be able to pay distributions on our common units, the trading price of our common units could decline, and unitholders could lose all or part of their investment.

Because forward-looking statements involve risks and uncertainties, we caution that there are important factors, in addition to those listed above, that may cause actual results to differ materially from those contained in the forward-looking statements. For a detailed discussion of those factors, see Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K filed with the SEC on Feb. 26, 2016 and in Part II, Item 1A. Risk Factors in our Quarterly Reports on Form 10-Q available from our office or from our website at www.williams.com .

                     
Williams Partners L.P.
Reconciliation of Non-GAAP Measures

(UNAUDITED)

                     
   2015   2016 
(Dollars in millions, except coverage ratios)  1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year  1st Qtr 2nd Qtr 3rd Qtr Year
                     
Williams Partners L.P.                    
Reconciliation of GAAP "Net Income (Loss)" to Non-GAAP "Modified EBITDA", "Adjusted EBITDA", and "Distributable cash flow”

 

                    
Net income (loss)  $112  $332  $(167) $(1,635) $(1,358)  $79  $(77) $351  $353 
Provision (benefit) for income taxes   3      1   (3)  1    1   (80)  (6)  (85)
Interest expense   192   203   205   211   811    229   231   229   689 
Equity (earnings) losses   (51)  (93)  (92)  (99)  (335)   (97)  (101)  (104)  (302)
Impairment of equity-method investments         461   898   1,359    112         112 
Other investing (income) loss   (1)        (1)  (2)      (1)  (28)  (29)
Proportional Modified EBITDA of equity-method investments   136   183   185   195   699    189   191   194   574 
Impairment of goodwill            1,098   1,098              
Depreciation and amortization expenses   419   419   423   441   1,702    435   432   426   1,293 
Accretion for asset retirement obligations associated with nonregulated operations   7   9   5   7   28    7   9   8   24 
Modified EBITDA   817   1,053   1,021   1,112   4,003    955   604   1,070   2,629 
                     
Adjustments                    
Estimated minimum volume commitments   55   55   65   (175)      60   64   70   194 
Severance and related costs                   25         25 
Potential rate refunds associated with rate case litigation                   15         15 
Merger and transition related expenses   32   14   2   2   50    5         5 
Constitution Pipeline project development costs                      8   11   19 
Share of impairment at equity-method investment   8   1   17   7   33          6   6 
Geismar Incident adjustment for insurance and timing      (126)        (126)             
Loss related to Geismar Incident   1   1         2              
Impairment of certain assets   3   24   2   116   145       389      389 
Loss related to Canada disposition                         32   32 
Loss (recovery) related to Opal incident   1      (8)  1   (6)             
Gain on extinguishment of debt      (14)        (14)             
Expenses associated with strategic alternatives         1   1   2              
Total EBITDA adjustments   100   (45)  79   (48)  86    105   461   119   685 
Adjusted EBITDA   917   1,008   1,100   1,064   4,089    1,060   1,065   1,189   3,314 
                     
Maintenance capital expenditures (1)   (54)  (80)  (114)  (114)  (362)   (58)  (75)  (121)  (254)
Interest expense (cash portion) (2)   (204)  (207)  (219)  (214)  (844)   (241)  (245)  (244)  (730)
Cash taxes   (1)           (1)             
Income attributable to noncontrolling interests (3)   (23)  (32)  (27)  (29)  (111)   (29)  (13)  (31)  (73)
WPZ restricted stock unit non-cash compensation   7   6   7   7   27    7   5   2   14 
Plymouth incident adjustment   4   6   7   4   21              
                     
Distributable cash flow attributable to Partnership Operations   646   701   754   718   2,819    739   737   795   2,271 
                     
Total cash distributed (4)  $725  $723  $723  $725  $2,896   $725  $725  $734  $2,184 
                     
Coverage ratios:                    
Distributable cash flow attributable to partnership operations divided by Total cash distributed   0.89   0.97   1.04   0.99   0.97    1.02   1.02   1.08   1.04 
                     
Net income (loss) divided by Total cash distributed   0.15   0.46   (0.23)  (2.26)  (0.47)   0.11   (0.11)  0.48   0.16 
                     
Notes:
(1)  Includes proportionate share of maintenance capital expenditures of equity investments.
     
(2)  Includes proportionate share of interest expense of equity investments.
     
(3)  Excludes allocable share of impairment of goodwill and certain EBITDA adjustments.
     
(4)  In order to exclude the impact of the IDR waiver associated with the WPZ merger termination fee from the determination of coverage ratios, cash distributions have been increased for the 2015 third quarter, fourth quarter, and year by $209 million, $209 million, and $418 million, respectively, and by $10 million in the first quarter of 2016. Cash distributions for the third quarter of 2016 have been increased to exclude the impact of the $150 million IDR waiver associated with the sale of our Canadian operations.
    
                     
Williams Partners L.P.
Reconciliation of Non-GAAP “Modified EBITDA” to Non-GAAP “Adjusted EBITDA”
(UNAUDITED)
   2015   2016 
(Dollars in millions)  1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year  1st Qtr 2nd Qtr 3rd Qtr Year
                     
Modified EBITDA:                    
Central  $133  $160  $163  $384  $840   $157 $134  $176 $467 
Northeast G&P   185   183   189   196   753    214  216   208  638 
Atlantic-Gulf   335   389   414   385   1,523    376  357   416  1,149 
West   161   150   169   77   557    155  158   166  479 
NGL & Petchem Services   6   158   85   72   321    53  (261)  104  (104)
Other   (3)  13   1   (2)  9            
Total Modified EBITDA  $817  $1,053  $1,021  $1,112  $4,003   $955 $604  $1,070 $2,629 
                     
Adjustments:                    

Central

                    
Estimated minimum volume commitments  $55  $55  $65  $(175) $   $60 $64  $70 $194 
Severance and related costs                   6       6 
ACMP Merger and transition costs   30   14   2   2   48    3       3 
Impairment of certain assets      3      8   11      48     48 
Total Central adjustments   85   72   67   (165)  59    69  112   70  251 

Northeast G&P

                    
Severance and related costs                   3       3 
Share of impairment at equity-method investments   8   1   17   7   33         6  6 
ACMP Merger and transition costs                   2       2 
Impairment of certain assets   3   21   2   6   32            
Total Northeast G&P adjustments   11   22   19   13   65    5     6  11 

Atlantic-Gulf

                    
Potential rate refunds associated with rate case litigation                   15       15 
Severance and related costs                   8       8 
Constitution Pipeline project development costs                     8   11  19 
Impairment of certain assets            5   5            
Total Atlantic-Gulf adjustments            5   5    23  8   11  42 

West

                    
Severance and related costs                   4       4 
Impairment of certain assets            97   97            
Loss (recovery) related to Opal incident   1      (8)  1   (6)           
Total West adjustments   1      (8)  98   91    4       4 

NGL & Petchem Services

                    
Impairment of certain assets                     341     341 
Loss related to Canada disposition                        32  32 
Severance and related costs                   4       4 
Loss related to Geismar Incident   1   1         2            
Geismar Incident adjustment for insurance and timing      (126)        (126)           
Total NGL & Petchem Services adjustments   1   (125)        (124)   4  341   32  377 

Other

                    
ACMP Merger-related expenses   2            2            
Expenses associated with strategic alternatives         1   1   2            
Gain on extinguishment of debt      (14)        (14)           
Total Other adjustments   2   (14)  1   1   (10)           
                     
Total Adjustments  $100  $(45) $79  $(48) $86   $105 $461  $119 $685 
                     
Adjusted EBITDA:                    
Central  $218  $232  $230  $219  $899   $226 $246  $246 $718 
Northeast G&P   196   205   208   209   818    219  216   214  649 
Atlantic-Gulf   335   389   414   390   1,528    399  365   427  1,191 
West   162   150   161   175   648    159  158   166  483 
NGL & Petchem Services   7   33   85   72   197    57  80   136  273 
Other   (1)  (1)  2   (1)  (1)           
Total Adjusted EBITDA  $917  $1,008  $1,100  $1,064  $4,089   $1,060 $1,065  $1,189 $3,314 

 

Contact:

Williams Partners L.P.
MEDIA:
Keith Isbell, 918-573-7308
or
INVESTORS:
John Porter, 918-573-0797
or
Brett Krieg, 918-573-4614