The Williams Companies, Inc. - Williams Reports Fourth-Quarter and Full-Year 2019 Financial Results

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Williams Reports Fourth-Quarter and Full-Year 2019 Financial Results

February 19, 2020

TULSA, Okla.--(BUSINESS WIRE)-- Williams (NYSE: WMB) today announced its unaudited financial results for the three and 12 months ended Dec. 31, 2019.

Full-year 2019 Results Reflect Year-Over-Year Growth Compared with 2018

Net income from continuing operations attributable to Williams available to common stockholders of $862 million – up $1.0 billion over 2018
Net income from continuing operations per share is $0.71 vs. net loss of $0.16 for 2018
Adjusted income per share is $0.99 – up 25% over 2018
Cash flow from operations of $3.69 billion – up 12% over 2018
Adjusted EBITDA of $5.02 billion, up $377 million or 8% over 2018
DCF of $3.30 billion – up $425 million or 15% over 2018

Solid Execution Delivers Strong 4Q 2019 Results

Net income from continuing operations attributable to Williams available to common stockholders of $138 million – up $710 million over 4Q '18
Net income per share of $0.11 vs. net loss of $0.47 per share in 4Q '18
Adjusted income per share of $0.24 – up 26% over 4Q '18
Cash flow from operations of $991 million – up $29 million or 3% over 4Q '18
Adjusted EBITDA of $1.284 billion – up $87 million or 7% over 4Q '18
Distributable Cash Flow ("DCF") of $828 million – up $80 million or 11% over 4Q '18
Dividend coverage ratio is 1.80x
Debt (Net of Cash) to adjusted EBITDA at quarter end: 4.39x

Impressive Business Performance With Records Set for Adjusted EBITDA, Gathering Volumes and Transportation Capacity

Record 2019 adjusted EBITDA driven by strong growth in Atlantic-Gulf and Northeast G&P
Record 4Q gathered volumes of 13.3 Bcf/d, up 10% over 4Q 2018; YTD record 12.9 Bcf/d, up 5% over 2018
Record 4Q '19 firm reserved transportation capacity of ~21.8 Bcf/d, up 8% over 4Q '18, driven by expansion projects including the Gateway and Rivervale South to Market expansions in the Northeast and the North Seattle Lateral expansion in the Northwest

CEO Perspective

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

“Williams achieved yet another year of record results in 2019, once again delivering impressive year-over-year growth and exceeding guidance midpoints in our key financial metrics while dramatically reducing capital expenditures. These results were underpinned by our strong operations – we set records for both gathered volumes and firm reserved transportation capacity, and our safety metrics continue to improve. We also generated cash in excess of dividends and capital expenditures, reflecting the combined impact of strong business performance, capital discipline and our ongoing portfolio optimization efforts. These results are driving improvement in our credit metrics. Looking ahead to 2020, our disciplined approach to capital allocation should allow us to fully fund our increased dividend and capital expenditures with internally generated cash flows.

"Williams remains extremely well-positioned to capture long-term sustainable growth with our natural gas focused strategy. We continue to see demand for new transport capacity along our premier interstate transmission systems, and the scale and location of our deepwater Gulf of Mexico assets provide a strong competitive advantage to capture emerging growth opportunities. Our resilient G&P business can not only withstand current market pressures, but is also well-positioned to generate long-term value as demand for natural gas continues to grow.”

Armstrong added, “Natural gas has been – and will continue to be – a cornerstone of our nation’s prosperity in the 21st century and a critical part of our clean energy future. Abundant, low cost and reliable natural gas has driven significant reductions in U.S. CO₂ emissions, lowered consumers’ utility bills and paved the way for investment in renewables. As the American energy leader that safely handles 30% of the nation’s natural gas, Williams’ large-scale infrastructure is ready to meet continued demand growth, both in the U.S. and abroad.”

Williams Summary Financial Information		4Q				YTD
Amounts in millions, except ratios and per-share amounts. Per share amounts are reported on a diluted basis. Net income (loss) amounts are from continuing operations attributable to The Williams Companies, Inc. available to common stockholders.		2019		2018		2019		2018

GAAP Measures
Net Income		$138		($572	)	$862		($156	)
Net Income Per Share		$0.11		($0.47	)	$0.71		($0.16	)
Cash Flow From Operations		$991		$962		$3,693		$3,293

Non-GAAP Measures (1)
Adjusted EBITDA		$1,284		$1,197		$5,015		$4,638
Adjusted Income		$293		$230		$1,200		$775
Adjusted Income Per Share		$0.24		$0.19		$0.99		$0.79
Distributable Cash Flow		$828		$748		$3,297		$2,872
Dividend Coverage Ratio		1.80	x	1.82	x	1.79	x	1.69	x

Other
Debt-to-Adjusted EBITDA at Quarter End (2)		4.39	x	4.80	x
Capital Investments (3)(4)		$408		$868		$2,476		$4,153

(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

Fourth-quarter 2019 net income benefited from $69 million of increased service revenues driven by Transco expansion projects, the consolidation of UEOM revenues beginning in March 2019, and growth in Northeast G&P volumes. These improvements were partially offset by lower revenues from our Barnett Shale operations primarily associated with reduced recognition of non-cash deferred revenue and the end of a contractual minimum volume commitment (MVC) period.
Fourth-quarter 2019 also benefited from $1.7 billion lower net asset impairments, partially offset by $692 million due to the absence of 4Q '18 gains on asset sales and $141 million associated with the absence of 4Q '18 gains from the deconsolidation of certain businesses.
Full-year 2019 net income benefited from $431 million of increased service revenues primarily due to the same drivers affecting 4Q '19, partially offset by the absence of revenues from operations sold or deconsolidated during 2018, as well as a $138 million decline in commodity margins.
The full year also benefited from $1.7 billion lower net asset impairments, partially offset by the absence of $692 million in gains on asset sales in 4Q '18 as well as $203 million associated with gains from the deconsolidation of certain businesses in 2018.
Full-year 2019 net income also reflects lower income attributable to non-controlling interests due to the WPZ merger in 2018 and an increased provision for income taxes in 2019 driven by higher pre-tax income.
The increase in cash flow from operations for fourth-quarter and full-year 2019 periods were largely driven by the increased service revenues as previously described and the collection of Transco's filed rates, some of which is subject to refund. The YTD 2019 period also benefited from the receipt of an income tax refund.

Non-GAAP Measures

The increase in adjusted EBITDA for 4Q 2019 and full-year 2019 largely reflects the previously mentioned increased Transco and Northeast G&P service revenues and the benefit of Transco's recently settled general rate case. Lower commodity margins partially offset the higher service revenues in full-year 2019.
Adjusted income for both the quarter and full-year periods also improved, driven by the higher adjusted EBITDA. The full-year period variance also reflects less income attributable to noncontrolling interests driven by the WPZ merger, partially offset by higher interest expense associated with financing obligations for leased pipeline capacity and an increased provision for income taxes.
Fourth-quarter and full-year 2019 DCF are higher, reflecting the increased adjusted EBITDA and lower maintenance capital, partially offset by higher net interest expense. The full-year increase also benefited from an income tax refund received in 2019.

Business Segment Results & Form 10-K

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 2019 Form 10-K, which Williams expects to file next 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
Amounts in millions	4Q 2019	4Q 2018		Change		4Q 2019	4Q 2018	Change		2019	2018		Change		2019	2018	Change
Atlantic-Gulf	$212	$605		($393	)	$570	$529	$41		$1,895	$2,023		($128	)	$2,300	$1,931	$369
West	311	(906	)	1,217		336	358	(22	)	1,232	308		924		1,351	1,577	(226	)
Northeast G&P	367	300		67		377	304	73		1,314	1,086		228		1,341	1,090	251
Other	5	20		(15	)	1	6	(5	)	6	(29	)	35		23	40	(17	)
Totals	$895	$19		$876		$1,284	$1,197	$87		$4,447	$3,388		$1,059		$5,015	$4,638	$377

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

Fourth-quarter and full-year 2019 modified and adjusted EBITDA reflect increased service revenues from Transco expansion projects placed in service and the benefit of Transco’s recently settled general rate case, partially offset by lower revenues from Gulfstar. Projects placed into full-service in 4Q '19 include the Gateway and Rivervale South to Market expansions serving the Northeast.
Fourth-quarter and full-year 2019 modified EBITDA were negatively impacted by a $354 million impairment of the Constitution Pipeline project, of which Williams' 41% share was $145 million, as well as the absence of an $81 million prior-year gain on the sale of certain Gulf Coast pipeline assets.
Full-year 2019 modified EBITDA was also negatively impacted by lower equity AFUDC due to lower levels of construction activity and severance expenses.
The impairment charges, gains on asset sales and severance expenses reflected in modified EBITDA are excluded from adjusted EBITDA.
The company filed a formal stipulation and agreement for Transco’s rate case with the FERC on December 31. All comments received during the public comment period were in support of the settlement. The company anticipates FERC approval of the settlement in second-quarter 2020.

West

Fourth-quarter and full-year 2019 modified and adjusted EBITDA reflect the absence of revenues from operations either sold or deconsolidated and lower revenues in Barnett Shale and Mid-Con, partially offset by higher revenue in Eagle Ford, Haynesville, the Conway fractionation and storage business and growth in JV EBITDA from Rocky Mountain Midstream. Fourth-quarter 2019 experienced an improvement in commodity margins driven by marketing activities, while full-year 2019 was unfavorably impacted by lower NGL prices.
The lower revenue at Barnett Shale noted above was primarily associated with reduced recognition of non-cash deferred revenue and the end of a contractual MVC period. Lower revenues in Mid-Con noted above were due to lower rates and volumes.
Fourth-quarter and full-year 2019 modified EBITDA were favorably impacted by the absence of the $1.8 billion impairment of certain Barnett Shale gathering assets in 2018, partially offset by the absence of a $591 million gain on the 2018 sale of our Four Corners operations.
The impairment charges and gains on asset sales reflected in modified EBITDA are excluded from adjusted EBITDA.
Fourth-quarter and YTD 2019 results reflect higher gathering volumes in the Eagle Ford, Haynesville, and Rocky Mountain Midstream systems. Eagle Ford gathering volumes increased by 9% versus 4Q '18 and by 10% YTD over 2018. Haynesville gathering volumes increased by 21% versus 4Q '18 and by 12% YTD over 2018. Rocky Mountain Midstream gathering volumes grew dramatically on a percentage basis, achieving an average of approximately 270 MMcf/d in 4Q 2019.

Northeast G&P

Improvement in modified and adjusted EBITDA for 4Q 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 in March 2019. The YTD improvements also reflect higher proportional EBITDA from our Appalachia Midstream investment driven by the Marcellus South system.
The 4Q and YTD 2019 periods reflect increases in gross gathering volumes, including 100% of operated equity-method investments, of 12% and 15%, respectively, over the same reporting periods in 2018.

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

Williams' fourth-quarter 2019 earnings presentation will be posted at www.williams.com. The company’s fourth-quarter 2019 earnings conference call and webcast with analysts and investors is scheduled for Thursday, Feb. 20, at 9:30 a.m. Eastern Time (8:30 a.m. Central Time). A limited number of phone lines will be available at (800) 353-6461. International callers should dial (334) 323-0501. The conference ID is 8801169. 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.

About Williams

Williams (NYSE: WMB) is committed to being the leader in providing infrastructure that safely delivers natural gas products to reliably fuel the clean energy economy. 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 connects the best supplies with the growing demand for clean energy. Williams owns and operates more than 30,000 miles of pipelines system wide – including Transco, the nation’s largest volume and fastest growing pipeline – and handles approximately 30 percent of the natural gas in the United States that is used every day for clean-power generation, heating and industrial use.

www.williams.com

The Williams Companies, Inc.
Consolidated Statement of Operations

		Year Ended December 31,
		2019			2018			2017
	(Millions, except per-share amounts)
Revenues:
Service revenues		$	5,933		$	5,502		$	5,312
Service revenues – commodity consideration		203			400			—
Product sales		2,065			2,784			2,719
Total revenues		8,201			8,686			8,031
Costs and expenses:
Product costs		1,961			2,707			2,300
Processing commodity expenses		105			137			—
Operating and maintenance expenses		1,468			1,507			1,576
Depreciation and amortization expenses		1,714			1,725			1,736
Selling, general, and administrative expenses		558			569			594
Impairment of certain assets		464			1,915			1,248
Gain on sale of certain assets and businesses		2			(692		)	(1,095		)
Regulatory charges resulting from Tax Reform		—			(17		)	674
Other (income) expense – net		8			67			71
Total costs and expenses		6,280			7,918			7,104
Operating income (loss)		1,921			768			927
Equity earnings (losses)		375			396			434
Other investing income (loss) – net		(79		)	187			282
Interest incurred		(1,218		)	(1,160		)	(1,116		)
Interest capitalized		32			48			33
Other income (expense) – net		33			92			(25		)
Income (loss) from continuing operations before income taxes		1,064			331			535
Provision (benefit) for income taxes		335			138			(1,974		)
Income (loss) from continuing operations		729			193			2,509
Income (loss) from discontinued operations		(15		)	—			—
Net income (loss)		714			193			2,509
Less: Net income (loss) attributable to noncontrolling interests		(136		)	348			335
Net income (loss) attributable to The Williams Companies, Inc.		850			(155		)	2,174
Preferred stock dividends		3			1			—
Net income (loss) available to common stockholders		$	847		$	(156	)	$	2,174
Amounts attributable to The Williams Companies, Inc. available to common stockholders:
Income (loss) from continuing operations		$	862		$	(156	)	$	2,174
Income (loss) from discontinued operations		(15		)	—			—
Net income (loss)		$	847		$	(156	)	$	2,174
Basic earnings (loss) per common share:
Income (loss) from continuing operations		$	.71		$	(.16	)	$	2.63
Income (loss) from discontinued operations		(.01		)	—			—
Net income (loss)		$	.70		$	(.16	)	$	2.63
Weighted-average shares (thousands)		1,212,037			973,626			826,177
Diluted earnings (loss) per common share:
Income (loss) from continuing operations		$	.71		$	(.16	)	$	2.62
Income (loss) from discontinued operations		(.01		)	—			—
Net income (loss)		$	.70		$	(.16	)	$	2.62
Weighted-average shares (thousands)		1,214,011			973,626			828,518

The Williams Companies, Inc.
Consolidated Balance Sheet

	December 31,
	2019			2018
	(Millions, except per-share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	289		$	168
Trade accounts and other receivables (net of allowance of $6 at December 31, 2019 and $9 at December 31, 2018)	996			992
Inventories	125			130
Other current assets and deferred charges	170			174
Total current assets	1,580			1,464

Investments	6,235			7,821
Property, plant, and equipment – net	29,200			27,504
Intangible assets – net of accumulated amortization	7,959			7,767
Regulatory assets, deferred charges, and other	1,066			746
Total assets	$	46,040		$	45,302

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	552		$	662
Accrued liabilities	1,276			1,102
Long-term debt due within one year	2,140			47
Total current liabilities	3,968			1,811

Long-term debt	20,148			22,367
Deferred income tax liabilities	1,782			1,524
Regulatory liabilities, deferred income, and other	3,778			3,603
Contingent liabilities and commitments

Equity:
Stockholders’ equity:
Preferred stock	35			35
Common stock ($1 par value; 1,470 million shares authorized at December 31, 2019 and December 31, 2018; 1,247 million shares issued at December 31, 2019 and 1,245 million shares issued at December 31, 2018)	1,247			1,245
Capital in excess of par value	24,323			24,693
Retained deficit	(11,002		)	(10,002		)
Accumulated other comprehensive income (loss)	(199		)	(270		)
Treasury stock, at cost (35 million shares of common stock)	(1,041		)	(1,041		)
Total stockholders’ equity	13,363			14,660
Noncontrolling interests in consolidated subsidiaries	3,001			1,337
Total equity	16,364			15,997
Total liabilities and equity	$	46,040		$	45,302

The Williams Companies, Inc.
Consolidated Statement of Cash Flows

	Year Ended December 31,
	2019			2018			2017
	(Millions)
OPERATING ACTIVITIES:
Net income (loss)	$	714		$	193		$	2,509
Adjustments to reconcile to net cash provided (used) by operating activities:
Depreciation and amortization	1,714			1,725			1,736
Provision (benefit) for deferred income taxes	376			220			(2,012		)
Equity (earnings) losses	(375		)	(396		)	(434		)
Distributions from unconsolidated affiliates	657			693			784
Gain on disposition of equity-method investments	(122		)	—			(269		)
Impairment of equity-method investments	186			32			—
(Gain) on sale of certain assets and businesses	2			(692		)	(1,095		)
Impairment of certain assets	464			1,915			1,249
(Gain) loss on deconsolidation of businesses	29			(203		)	—
Amortization of stock-based awards	57			55			78
Regulatory charges resulting from Tax Reform	—			(15		)	776
Cash provided (used) by changes in current assets and liabilities:
Accounts and notes receivable	34			(36		)	(88		)
Inventories	5			(16		)	8
Other current assets and deferred charges	21			17			(21		)
Accounts payable	(46		)	(93		)	118
Accrued liabilities	153			23			(92		)
Other, including changes in noncurrent assets and liabilities	(176		)	(129		)	(158		)
Net cash provided (used) by operating activities	3,693			3,293			3,089
FINANCING ACTIVITIES:
Proceeds from (payments of) commercial paper – net	(4		)	(2		)	(93		)
Proceeds from long-term debt	767			3,926			3,333
Payments of long-term debt	(909		)	(3,204		)	(5,925		)
Proceeds from issuance of common stock	10			15			2,131
Proceeds from sale of partial interest in consolidated subsidiary	1,334			—			—
Common dividends paid	(1,842		)	(1,386		)	(992		)
Dividends and distributions paid to noncontrolling interests	(124		)	(591		)	(822		)
Contributions from noncontrolling interests	36			15			17
Payments for debt issuance costs	—			(26		)	(17		)
Other – net	(13		)	(46		)	(92		)
Net cash provided (used) by financing activities	(745		)	(1,299		)	(2,460		)
INVESTING ACTIVITIES:
Property, plant, and equipment:
Capital expenditures (1)	(2,109		)	(3,256		)	(2,399		)
Dispositions – net	(40		)	(7		)	(41		)
Contributions in aid of construction	52			411			426
Proceeds from sale of businesses, net of cash divested	(2		)	1,296			2,067
Purchases of businesses, net of cash acquired	(728		)	—			—
Proceeds from dispositions of equity-method investments	485			—			200
Purchases of and contributions to equity-method investments	(453		)	(1,132		)	(132		)
Other – net	(32		)	(37		)	(21		)
Net cash provided (used) by investing activities	(2,827		)	(2,725		)	100
Increase (decrease) in cash and cash equivalents	121			(731		)	729
Cash and cash equivalents at beginning of year	168			899			170
Cash and cash equivalents at end of year	$	289		$	168		$	899
_________
(1) Increases to property, plant, and equipment	$	(2,023	)	$	(3,021	)	$	(2,662	)
Changes in related accounts payable and accrued liabilities	(86		)	(235		)	263
Capital expenditures	$	(2,109	)	$	(3,256	)	$	(2,399	)

Atlantic-Gulf
(UNAUDITED)
	2018															2019
(Dollars in millions)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year			1st Qtr		2nd Qtr		3rd Qtr			4th Qtr			Year

Revenues:
Service revenues:
Nonregulated gathering & processing fee-based revenue	$	138		$	128		$	138		$	137		$	541		$	128	$	119	$	117		$	113		$	477
Regulated transportation revenue	413			406			411			508			1,738			517		514		549			548			2,128
Other fee revenues	32			34			34			34			134			34		40		32			34			140
Tracked service revenue	26			22			24			24			96			30		25		33			28			116
Nonregulated commodity consideration	15			12			18			14			59			13		13		7			8			41
Product sales:
NGL sales from gas processing	15			10			16			15			56			12		12		6			9			39
Marketing sales	45			57			67			53			222			40		32		23			34			129
Other sales	1			1			1			—			3			2		1		1			1			5
Tracked product sales	32			37			47			38			154			28		23		46			18			115
Total revenues	717			707			756			823			3,003			804		779		814			793			3,190
Segment costs and expenses:
NGL cost of goods sold	15			12			19			14			60			13		14		6			8			41
Marketing cost of goods sold	44			56			67			53			220			41		28		23			34			126
Other cost of goods sold	—			—			—			—			—			—		2		—			1			3
Tracked cost of goods sold	33			38			48			39			158			28		25		46			19			118
Processing commodity expenses	5			2			3			6			16			5		5		2			4			16
Operating and administrative costs	177			181			181			197			736			168		198		176			208			750
Tracked operating and administrative costs	26			22			24			23			95			30		25		32			29			116
Other segment costs and expenses	(2		)	(15		)	(29		)	14			(32		)	1		2		(26		)	(29		)	(52		)
Impairment of certain assets ⁽¹⁾	—			—			—			—			—			—		—		—			354			354
Gain on sale of certain assets and businesses	—			—			—			(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			628			1,472
Proportional Modified EBITDA of equity-method investments	43			44			49			47			183			42		44		44			47			177
Modified EBITDA	451			475			492			605			2,023			560		524		599			212			1,895
Adjustments	15			(19		)	(12		)	(76		)	(92		)	—		35		12			358			405
Adjusted EBITDA	$	466		$	456		$	480		$	529		$	1,931		$	560	$	559	$	611		$	570		$	2,300
NGL Margin	$	10		$	8		$	12		$	9		$	39		$	7	$	6	$	5		$	5		$	23

Statistics for Operated Assets
Gathering, Processing, and Crude Oil Transportation
Gathering volumes (Bcf per day) - Consolidated ⁽²⁾	0.29			0.23			0.26			0.24			0.26			0.25		0.25		0.22			0.29			0.25
Gathering volumes (Bcf per day) - Non-consolidated ⁽³⁾	0.24			0.25			0.25			0.31			0.26			0.35		0.38		0.36			0.35			0.36
Plant inlet natural gas volumes (Bcf per day) - Consolidated ⁽²⁾	0.54			0.43			0.51			0.53			0.50			0.53		0.55		0.50			0.58			0.54
Plant inlet natural gas volumes (Bcf per day) - Non-consolidated ⁽³⁾	0.24			0.25			0.25			0.32			0.27			0.35		0.39		0.36			0.35			0.36
Crude transportation volumes (Mbbls/d)	142			132			147			140			140			146		136		128			135			136
Consolidated ⁽²⁾
Ethane margin ($/gallon)	$	.03		$	.16		$	.24		$	.14		$	.14		$	.10	$	.02	$	.01		$	.01		$	.04
Non-ethane margin ($/gallon)	$	.66		$	.74		$	.76		$	.58		$	.68		$	.48	$	.28	$	.35		$	.37		$	.36
NGL margin ($/gallon)	$	.40		$	.48		$	.51		$	.36		$	.43		$	.26	$	.17	$	.22		$	.24		$	.22
Ethane equity sales (Mbbls/d)	2.82			1.91			3.05			2.98			2.69			4.16		4.11		1.85			1.97			3.01
Non-ethane equity sales (Mbbls/d)	3.87			2.35			3.14			3.21			3.14			3.28		5.34		3.15			3.57			3.84
NGL equity sales (Mbbls/d)	6.69			4.26			6.19			6.19			5.83			7.44		9.45		5.00			5.54			6.85
Ethane production (Mbbls/d)	12			12			15			16			14			17		14		9			10			13
Non-ethane production (Mbbls/d)	19			17			18			19			18			19		19		18			21			19
NGL production (Mbbls/d)	31			29			33			35			32			36		33		27			31			32
Non-consolidated ⁽³⁾
NGL equity sales (Mbbls/d)	3			5			4			5			4			7		8		6			5			6
NGL production (Mbbls/d)	18			20			20			23			20			24		27		24			26			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			1,227.6			4,737.2
Avg. daily transportation volumes (Tbtu)	12.2			10.6			11.9			12.5			11.8			13.2		12.2		13.2			13.3			13.0
Avg. daily firm reserved capacity (Tbtu)	15.4			15.0			15.0			16.4			15.5			17.1		17.0		17.3			17.5			17.2

(1) Our partners' $209 million share of the fourth-quarter 2019 impairment of the Constitution pipeline project is reflected outside of Modified EBITDA within Net loss attributable to noncontrolling interests.
(2) Excludes volumes associated with equity-method investments that are not consolidated in our results.
(3) Includes 100% of the volumes associated with operated equity-method investments.

Northeast G&P
(UNAUDITED)
	2018										2019
(Dollars in millions)	1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		Year		1st Qtr		2nd Qtr		3rd Qtr			4th Qtr		Year

Revenues:
Service revenues:
Nonregulated gathering and processing fee-based revenue	$	189	$	196	$	211	$	226	$	822	$	230	$	267	$	284		$	299	$	1,080
Other fee revenues	39		36		36		43		154		46		63		69			80		258
Nonregulated commodity consideration	4		4		6		6		20		5		3		1			3		12
Product sales:
NGL sales from gas processing	4		5		6		5		20		5		3		—			3		11
Marketing sales	89		65		57		35		246		37		28		26			30		121
Tracked product sales	5		5		6		5		21		5		6		4			3		18
Total revenues	330		311		322		320		1,283		328		370		384			418		1,500

Segment costs and expenses:
NGL cost of goods sold	4		5		6		5		20		5		3		—			4		12
Marketing cost of goods sold	90		65		57		36		248		37		29		26			30		122
Tracked cost of goods sold	5		7		6		3		21		5		6		3			4		18
Processing commodity expenses	2		2		3		2		9		3		2		1			2		8
Operating and administrative costs	85		91		96		108		380		97		130		120			122		469
Other segment costs and expenses	2		1		4		5		12		4		—		(3		)	—		1
Impairment of certain assets	—		—		—		—		—		—		—		—			10		10
Total segment costs and expenses	188		171		172		159		690		151		170		147			172		640

Proportional Modified EBITDA of equity-method investments	108		115		131		139		493		122		103		108			121		454
Modified EBITDA	250		255		281		300		1,086		299		303		345			367		1,314
Adjustments	—		—		—		4		4		3		16		(2		)	10		27
Adjusted EBITDA	$	250	$	255	$	281	$	304	$	1,090	$	302	$	319	$	343		$	377	$	1,341
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			4.41		4.24
Gathering volumes (Bcf per day) - Non-consolidated ⁽²⁾	3.82		3.59		3.73		3.89		3.76		4.27		4.08		4.35			4.47		4.29
Plant inlet natural gas volumes (Bcf per day)	0.49		0.55		0.52		0.52		0.52		0.63		1.04		1.16			1.33		1.04

Ethane equity sales (Mbbls/d)	1.33		3.17		2.74		2.80		2.52		2.73		1.83		1.94			1.05		1.89
Non-ethane equity sales (Mbbls/d)	0.79		1.09		1.49		1.28		1.16		1.21		1.09		0.67			0.83		0.96
NGL equity sales (Mbbls/d)	2.12		4.26		4.23		4.08		3.68		3.94		2.92		2.61			1.88		2.85

Ethane production (Mbbls/d)	23		27		26		20		24		22		24		29			37		28
Non-ethane production (Mbbls/d)	21		21		23		22		22		22		34		63			69		48
NGL production (Mbbls/d)	44		48		49		42		46		44		58		92			106		76

(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.

West
(UNAUDITED)
	2018													2019
(Dollars in millions)	1st Qtr			2nd Qtr		3rd Qtr		4th Qtr			Year			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year

Revenues:
Service revenues:
Nonregulated gathering & processing fee-based revenue	$	386		$	398	$	387	$	335		$	1,506		$	319		$	331		$	282		$	276		$	1,208
Regulated transportation revenue	109			104		106		110			429			110			104			107			111			432
Other fee revenues	36			32		40		41			149			44			42			44			41			171
Tracked service revenues	—			1		—		—			1			—			1			—			1			2
Nonregulated commodity consideration	82			78		97		64			321			46			40			30			34			150

Product sales:
NGL sales from gas processing	85			76		90		71			322			48			41			31			34			154
Marketing sales	415			462		613		569			2,059			422			385			352			453			1,612
Other sales	14			12		18		5			49			5			5			2			2			14
Tracked product sales	16			10		11		(19		)	18			4			3			4			6			17
Total revenues	1,143			1,173		1,362		1,176			4,854			998			952			852			958			3,760
Segment costs and expenses:
NGL cost of goods sold	85			81		101		66			333			49			41			32			36			158
Marketing cost of goods sold	415			459		603		585			2,062			419			388			345			437			1,589
Other cost of goods sold	10			7		14		4			35			4			4			—			2			10
Tracked cost of goods sold	16			10		12		(20		)	18			3			4			5			5			17
Processing commodity expenses	30			20		26		40			116			31			19			13			16			79
Operating and administrative costs	193			215		200		166			774			166			180			166			159			671
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			—			24			100
Gain on sale of certain assets and businesses	—			—		—		(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			679			2,643
Proportional Modified EBITDA of equity-method investments	18			19		25		32			94			26			28			29			32			115
Modified EBITDA	413			389		412		(906		)	308			332			278			311			311			1,232
Adjustments	(7		)	—		12		1,264			1,269			14			78			2			25			119
Adjusted EBITDA	$	406		$	389	$	424	$	358		$	1,577		$	346		$	356		$	313		$	336		$	1,351
NGL margin	$	52		$	53	$	60	$	29		$	194		$	14		$	21		$	16		$	16		$	67

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			3.61			3.51			3.52
Gathering volumes (Bcf per day) - Non-consolidated⁽²⁾	—			—		0.15		0.16			0.08			0.17			0.15			0.21			0.27			0.20
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			1.44			1.48
Plant inlet natural gas volumes (Bcf per day) - Non-consolidated ⁽²⁾	—			—		0.14		0.17			0.08			0.17			0.14			0.21			0.26			0.08
Ethane equity sales (Mbbls/d)	19.01			10.23		12.19		16.40			14.44			14.63			14.59			3.32			5.17			9.38
Non-ethane equity sales (Mbbls/d)	19.83			18.80		19.48		14.40			18.12			12.59			13.54			14.02			11.95			13.03
NGL equity sales (Mbbls/d)	38.84			29.03		31.67		30.80			32.56			27.22			28.13			17.34			17.12			22.41
Ethane margin ($/gallon)	$	.01		$	.07	$	.18	$	.02		$	.06		$	(.03	)	$	(.03	)	$	(.06	)	$	(.10	)	$	(.04	)
Non-ethane margin ($/gallon)	$	.69		$	.71	$	.69	$	.49		$	.65		$	.34		$	.42		$	.32		$	.37		$	.36
NGL margin ($/gallon)	$	.35		$	.48	$	.49	$	.24		$	.39		$	.14		$	.19		$	.25		$	.23		$	.19
Ethane production (Mbbls/d) - Consolidated ⁽¹⁾	31			26		28		29			28			29			22			9			11			18
Ethane production (Mbbls/d) - Non-consolidated ⁽²⁾	—			—		—		1			—			1			—			2			3			1
Non-ethane production (Mbbls/d) - Consolidated ⁽¹⁾	62			61		59		41			55			33			37			39			35			36
Non-ethane production (Mbbls/d) - Non-consolidated ⁽²⁾	—			—		5		5			3			6			1			16			19			11
NGL production (Mbbls/d)	93			87		92		76			86			69			60			66			68			66
NGL and Crude Transportation volumes (Mbbls) ⁽³⁾	21,263			21,334		22,105		23,049			87,751			22,848			24,465			22,972			21,910			92,195
Northwest Pipeline LLC
Throughput (Tbtu)	226.1			188.1		193.5		212.3			820.0			243.5			184.6			179.2			248.8			856.1
Avg. daily transportation volumes (Tbtu)	2.5			2.1		2.1		2.3			2.2			2.7			2.0			1.9			2.7			2.3
Avg. daily firm reserved capacity (Tbtu)	3.1			3.1		3.1		3.1			3.1			3.1			3.0			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.

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		4th Qtr		Year

Capital expenditures:
Atlantic-Gulf	$	764	$	746	$	549	$	359	$	2,418	$	193		$	234		$	497	$	202	$	1,126
Northeast G&P	114		104		114		139		471		152			177			131		74		534
West	69		74		96		93		332		69			80			153		126		428
Other	10		9		10		6		35		8			6			5		2		21
Total ⁽¹⁾	$	957	$	933	$	769	$	597	$	3,256	$	422		$	497		$	786	$	404	$	2,109

Purchases of investments:
Atlantic-Gulf	$	1	$	—	$	5	$	—	$	6	$	—		$	12		$	3	$	1	$	16
Northeast G&P	20		70		114		58		262		47			61			34		63		205
West	—		—		593		271		864		52			70			82		28		232
Total	$	21	$	70	$	712	$	329	$	1,132	$	99		$	143		$	119	$	92	$	453

Summary:
Atlantic-Gulf	$	765	$	746	$	554	$	359	$	2,424	$	193		$	246		$	500	$	203	$	1,142
Northeast G&P	134		174		228		197		733		199			238			165		137		739
West	69		74		689		364		1,196		121			150			235		154		660
Other	10		9		10		6		35		8			6			5		2		21
Total	$	978	$	1,003	$	1,481	$	926	$	4,388	$	521		$	640		$	905	$	496	$	2,562

Capital investments:
Increases to property, plant, and equipment	$	934	$	930	$	618	$	539	$	3,021	$	418		$	559		$	730	$	316	$	2,023
Purchases of businesses, net of cash acquired	—		—		—		—		—		727			—			1		—		728
Purchases of investments	21		70		712		329		1,132		99			143			119		92		453
Total	$	955	$	1,000	$	1,330	$	868	$	4,153	$	1,244		$	702		$	850	$	408	$	3,204

⁽¹⁾ Increases to property, plant, and equipment	$	934	$	930	$	618	$	539	$	3,021	$	418		$	559		$	730	$	316	$	2,023
Changes in related accounts payable and accrued liabilities	23		3		151		58		235		4			(62		)	56		88		86
Capital expenditures	$	957	$	933	$	769	$	597	$	3,256	$	422		$	497		$	786	$	404	$	2,109

Contributions from noncontrolling interests	$	3	$	8	$	2	$	2	$	15	$	4		$	28		$	—	$	4	$	36
Contributions in aid of construction	$	190	$	149	$	56	$	16	$	411	$	10		$	8		$	7	$	27	$	52
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		$	—	$	4	$	1,334
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) from Continuing Operations 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		4th Qtr		Year

Income (loss) from continuing operations attributable to The Williams Companies, Inc. available to common stockholders	$	152	$	135		$	129		$	(572	)	$	(156	)	$	194	$	310	$	220	$	138	$	862

Income (loss) from continuing operations - diluted earnings (loss) per common share ⁽¹⁾	$	.18	$	.16		$	.13		$	(.47	)	$	(.16	)	$	.16	$	.26	$	.18	$	.11	$	.71
Adjustments:
Atlantic-Gulf
Constitution Pipeline project development costs	$	2	$	1		$	1		$	—		$	4		$	—	$	1	$	1	$	1	$	3
Impairment of certain assets ⁽²⁾	—		—			—			—			—			—		—		—		354		354
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		—		1		16
Gain on sale of certain Gulf Coast pipeline assets	—		—			—			(81		)	(81		)	—		—		—		—		—
Gain on asset retirement	—		—			(10		)	(2		)	(12		)	—		—		—		—		—
Severance and related costs	—		—			—			—			—			—		19		11		2		32
Total Atlantic-Gulf adjustments	15		(19		)	(12		)	(76		)	(92		)	—		35		12		358		405
Northeast G&P
Expenses associated with new venture </

Press Release Details

Williams Reports Fourth-Quarter and Full-Year 2019 Financial Results