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Williams Reports Strong Second-Quarter Results

Williams (NYSE: WMB) today announced its unaudited financial results for the three and six months ended June 30, 2023.

Robust growth continues across key financial metrics driven by base business

  • GAAP net income of $547 million, or $0.45 per diluted share (EPS) – up 36% vs. 2Q 2022
  • Adjusted net income of $515 million, or $0.42 per diluted share (Adjusted EPS) – up 5% vs. 2Q 2022
  • Adjusted EBITDA of $1.611 billion – up $115 million or 8% vs. 2Q 2022
  • Cash flow from operations (CFFO) of $1.377 billion – up $279 million or 25% vs. 2Q 2022
  • Available funds from operations (AFFO) of $1.215 billion – up $85 million or 8% vs. 2Q 2022
  • Dividend coverage ratio of 2.23x (AFFO basis)
  • Repurchased $56 million in shares through opportunistic stock buyback program
  • Record gathering volumes of 18.03 Bcf/d
  • Continued improvement of balance sheet with leverage ratio of 3.50x

Recent progress on projects in execution to deliver additional earnings growth in 2023 and beyond

  • Continued construction of Regional Energy Access with partial in service expected ahead of schedule in 4Q 2023
  • Received FERC certificate on Southside Reliability Enhancement Project
  • Received favorable environmental assessment on Texas to Louisiana Energy Pathway Project
  • Filed FERC applications for Carolina Market Link and Alabama to Georgia Connector Projects
  • Signed precedent agreement on MountainWest’s Overthrust Westbound Expansion
  • Continued execution of modernization and Emissions Reduction Program (ERP) on transmission systems with completion of first ERP project on Transco compressor station

CEO Perspective

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

“Our natural gas-centric strategy continues to prove its resiliency in a low gas price environment with second-quarter Adjusted EBITDA up 8 percent over the same period last year driven by strong earnings growth across our base business. In addition to record gathering volumes, we also benefited from our first full quarter of contributions from the MountainWest Pipeline transmission and storage assets, which our teams have quickly integrated into our large-scale platforms in the western U.S.

“On the project execution front, we are in full construction on the Regional Energy Access expansion, and expect to bring half of the project in service ahead of schedule this winter to begin moving additional Northeast gas to nearby markets. We are generating value from our 2022 acquisitions with several growth projects underway, including MountainWest’s Overthrust Westbound Expansion. Elsewhere across our footprint, we are progressing on an impressive list of transmission and deepwater Gulf of Mexico projects, which we expect to drive additional growth toward the end of 2024.”

Armstrong added, “As we continue expanding to serve growing markets, we’re also investing in a multi-year modernization program of our large-scale transmission systems, which will reduce emissions and increase earnings. Our recently issued Sustainability Report details this progress as well as ongoing efforts to support communities, environmental stewardship and workforce development and diversity.”

Williams Summary Financial Information

2Q

 

Year to Date

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

2023

2022

 

2023

2022

 

 

 

 

 

 

GAAP Measures

 

 

 

 

 

Net Income

$547

$400

 

$1,473

$779

Net Income Per Share

$0.45

$0.33

 

$1.20

$0.64

Cash Flow From Operations

$1,377

$1,098

 

$2,891

$2,180

 

 

 

 

 

 

Non-GAAP Measures (1)

 

 

 

 

 

Adjusted EBITDA

$1,611

$1,496

 

$3,406

$3,007

Adjusted Net Income

$515

$484

 

$1,199

$983

Adjusted Earnings Per Share

$0.42

$0.40

 

$0.98

$0.80

Available Funds from Operations

$1,215

$1,130

 

$2,660

$2,320

Dividend Coverage Ratio

2.23x

2.19x

 

2.44x

2.24x

 

 

 

 

 

 

Other

 

 

 

 

 

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

3.50x

3.82x

 

 

 

Capital Investments (3) (4)

$715

$429

 

$1,240

$745

 

 

 

 

 

 

(1) Schedules reconciling Adjusted Net Income, Adjusted EBITDA, Available Funds from Operations and Dividend 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) 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 (growth & maintenance capital),purchases of and contributions to equity-method investments and purchases of other long-term investments.

(4) Year-to-date 2023 capital excludes $1.053 billion acquisition of MountainWest Pipeline Holding company, which closed February 14, 2023. Second quarter 2022 and full-year 2022 capital excludes $933 million for purchase of the Trace Midstream Haynesville gathering assets, which closed April 29, 2022.

GAAP Measures

Second-quarter 2023 net income increased by $147 million compared to the prior year reflecting the benefit of higher service revenues driven by contributions from recent acquisitions and increased volumes and rates in the Northeast G&P segment, as well as a favorable change of $324 million in net unrealized gains/losses on commodity derivatives. These improvements were partially offset by lower results from our upstream business driven by lower prices, lower commodity marketing margins, and higher operating and administrative expenses, including the impact from recent acquisitions. The tax provision increased primarily due to higher pretax income and the absence of $134 million associated with the release of valuation allowances on deferred income tax assets and federal income tax settlements recorded in the prior year. The second-quarter and year-to-date 2023 periods also reported a loss from discontinued operations associated with an adverse legal ruling involving former refinery operations.

For year-to-date 2023, net income increased $694 million compared to the prior year reflecting a favorable change of $774 million in net unrealized gains/losses on commodity derivatives. Other drivers of the year-to-date increase are similar to those described for the quarterly comparison, except that improved commodity marketing margins more than offset lower NGL processing margins for the year-to-date period.

Cash flow from operations for the second-quarter and year-to-date 2023 periods increased compared to 2022 primarily due to favorable net changes in working capital. The year-to-date improvement also reflected higher operating results exclusive of non-cash items.

Non-GAAP Measures

Second-quarter 2023 Adjusted EBITDA increased by $115 million over the prior year, driven by the previously described higher service revenues, partially offset by lower commodity marketing margins, reduced upstream results, and higher operating and administrative expenses. Year-to-date 2023 Adjusted EBITDA increased by $399 million over the prior year, driven by similar factors, except that commodity margins were overall improved.

Second-quarter 2023 Adjusted Net Income improved by $31 million over the prior year, driven by the previously described impacts to net income, adjusted primarily to remove the effects of net unrealized gains/losses on commodity derivatives, amortization of certain assets from the Sequent acquisition, and favorable income tax benefits. Year-to-date Adjusted Net Income increased by $216 million over the prior year for similar reasons.

Second-quarter 2023 Available Funds From Operations (AFFO) increased by $85 million compared to the prior year primarily due to higher results from continuing operations exclusive of non-cash items. Year-to-date 2023 AFFO increased by $340 million also primarily reflecting higher results from continuing operations exclusive of non-cash items.

 

Second Quarter

 

Year to Date

Amounts in millions

Modified EBITDA

 

Adjusted EBITDA

 

Modified EBITDA

 

Adjusted EBITDA

2Q 2023

2Q 2022

 

Change

 

2Q 2023

 

2Q 2022

Change

 

2023

2022

 

Change

 

2023

2022

Change

Transmission & Gulf of Mexico

$731

$652

 

$79

 

 

$748

 

$652

$96

 

 

$1,446

$1,349

 

$97

 

 

$1,476

$1,349

$127

 

Northeast G&P

515

450

 

65

 

 

515

 

450

65

 

 

985

868

 

117

 

 

985

868

117

 

West

312

288

 

24

 

 

312

 

296

16

 

 

616

548

 

68

 

 

598

556

42

 

Gas & NGL Marketing Services

68

(282

)

350

 

 

(16

)

6

(22

)

 

635

(269

)

904

 

 

215

71

144

 

Other

41

139

 

(98

)

 

52

 

92

(40

)

 

115

144

 

(29

)

 

132

163

(31

)

Total

$1,667

$1,247

 

$420

 

 

$1,611

 

$1,496

$115

 

 

$3,797

$2,640

 

$1,157

 

 

$3,406

$3,007

$399

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

Transmission & Gulf of Mexico

Second-quarter and year-to-date 2023 Modified and Adjusted EBITDA improved compared to the prior year driven by the MountainWest and NorTex Midstream acquisitions, as well as higher service revenues. Modified EBITDA for 2023 was further impacted by one-time MountainWest acquisition and transition costs, which are excluded from Adjusted EBITDA.

Northeast G&P

Second-quarter and year-to-date 2023 Modified and Adjusted EBITDA increased over the prior year driven by increased gathering rates and volumes, partially offset by lower rates at Laurel Mountain Midstream and Bradford joint ventures.

West

Second-quarter and year-to-date 2023 Modified and Adjusted EBITDA increased compared to the prior year benefiting from higher service revenues reflecting realized gains on natural gas hedges and higher Haynesville volumes, partially offset by lower NYMEX-based rates in the Barnett, as well increased JV EBITDA. The year-to-date period improvement also included contributions from Trace Midstream acquired in April 2022 and lower processing margins due to a short-term gas price spike at Opal early in the year and severe weather impacts.

Gas & NGL Marketing Services

Second-quarter 2023 Modified EBITDA improved from the prior year primarily reflecting a $382 million net favorable change in unrealized gains/losses on commodity derivatives. Year-to-date 2023 Modified EBITDA improved from the prior year primarily reflecting higher commodity marketing margins and a $772 million net favorable change in unrealized gains/losses on commodity derivatives. The unrealized gains/losses on commodity derivatives are excluded from Adjusted EBITDA.

Other

Second-quarter 2023 Modified EBITDA decreased compared to the prior year primarily reflecting a $58 million net unfavorable change in unrealized gains/losses on commodity derivatives, which is excluded from Adjusted EBITDA. The second-quarter and year-to-date periods were also impacted by lower results from our upstream business driven by lower prices.

Business Segment Results & Form 10-Q

Williams' operations are comprised of the following reportable segments: Transmission & Gulf of Mexico, Northeast G&P, West and Gas & NGL Marketing Services, as well as Other. For more information, see the company's second-quarter 2023 Form 10-Q.

2023 Financial Guidance

The company continues to expect 2023 Adjusted EBITDA between $6.4 billion and $6.8 billion with 2023 growth capex between $1.6 billion to $1.9 billion. Importantly, Williams anticipates a leverage ratio midpoint of 3.65x, which will allow it to retain financial flexibility. The dividend was increased by 5.3% on an annualized basis to $1.79 in 2023 from $1.70 in 2022.

Williams' Second-Quarter 2023 Materials to be Posted Shortly; Q&A Webcast Scheduled for Tomorrow

Williams' second-quarter 2023 earnings presentation will be posted at www.williams.com. The company’s second-quarter 2023 earnings conference call and webcast with analysts and investors is scheduled for Thursday, Aug. 3, at 9:30 a.m. Eastern Time (8:30 a.m. Central Time). Participants who wish to join the call by phone must register using the following link: https://conferencingportals.com/event/MTgNWtxQ

A webcast link to the conference call will be provided on Williams’ Investor Relations website. A replay of the webcast will be available on the website for at least 90 days following the event.

About Williams

As the world demands reliable, low-cost, low-carbon energy, Williams (NYSE: WMB) will be there with the best transport, storage and delivery solutions 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, storage, wholesale marketing and trading 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 33,000 miles of pipelines system wide – including Transco, the nation’s largest volume pipeline – and handles approximately one third of the natural gas in the United States that is used every day for clean-power generation, heating and industrial use. Learn how the company is leveraging its nationwide footprint to incorporate clean hydrogen, NextGen Gas and other innovations at www.williams.com.

The Williams Companies, Inc.

Consolidated Statement of Income

(Unaudited)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(Millions, except per-share amounts)

Revenues:

 

 

 

 

 

 

 

Service revenues

$

1,748

 

 

$

1,606

 

 

$

3,442

 

 

$

3,143

 

Service revenues – commodity consideration

 

27

 

 

 

86

 

 

 

63

 

 

 

163

 

Product sales

 

593

 

 

 

1,111

 

 

 

1,438

 

 

 

2,215

 

Net gain (loss) on commodity derivatives

 

115

 

 

 

(313

)

 

 

621

 

 

 

(507

)

Total revenues

 

2,483

 

 

 

2,490

 

 

 

5,564

 

 

 

5,014

 

Costs and expenses:

 

 

 

 

 

 

 

Product costs

 

421

 

 

 

857

 

 

 

974

 

 

 

1,660

 

Net processing commodity expenses

 

44

 

 

 

40

 

 

 

98

 

 

 

70

 

Operating and maintenance expenses

 

481

 

 

 

465

 

 

 

944

 

 

 

859

 

Depreciation and amortization expenses

 

515

 

 

 

506

 

 

 

1,021

 

 

 

1,004

 

Selling, general, and administrative expenses

 

161

 

 

 

160

 

 

 

337

 

 

 

314

 

Other (income) expense – net

 

(9

)

 

 

(10

)

 

 

(40

)

 

 

(19

)

Total costs and expenses

 

1,613

 

 

 

2,018

 

 

 

3,334

 

 

 

3,888

 

Operating income (loss)

 

870

 

 

 

472

 

 

 

2,230

 

 

 

1,126

 

Equity earnings (losses)

 

160

 

 

 

163

 

 

 

307

 

 

 

299

 

Other investing income (loss) – net

 

13

 

 

 

2

 

 

 

21

 

 

 

3

 

Interest incurred

 

(319

)

 

 

(286

)

 

 

(623

)

 

 

(575

)

Interest capitalized

 

13

 

 

 

5

 

 

 

23

 

 

 

8

 

Other income (expense) – net

 

19

 

 

 

6

 

 

 

39

 

 

 

11

Income (loss) before income taxes

 

756

 

 

 

362

 

 

 

1,997

 

 

 

872

 

Less: Provision (benefit) for income taxes

 

175

 

 

 

(45

)

 

 

459

 

 

 

73

 

Income (loss) from continuing operations

 

581

 

 

 

407

 

 

 

1,538

 

 

 

799

 

Income (loss) from discontinued operations

 

(87

)

 

 

 

 

 

(87

)

 

 

 

Net income (loss)

 

494

 

 

 

407

 

 

 

1,451

 

 

 

799

 

Less: Net income (loss) attributable to noncontrolling interests

 

34

 

 

 

7

 

 

 

64

 

 

 

19

 

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

 

460

 

 

 

400

 

 

 

1,387

 

 

 

780

 

Less: Preferred stock dividends

 

 

 

 

 

 

 

1

 

 

 

1

 

Net income (loss) available to common stockholders

$

460

 

 

$

400

 

 

$

1,386

 

 

$

779

 

Amounts attributable to The Williams Companies, Inc. available to common stockholders:.

 

 

 

 

 

 

 

Income (loss) from continuing operations

$

547

 

 

$

400

 

 

$

1,473

 

 

$

779

 

Income (loss) from discontinued operations

 

(87

)

 

 

 

 

 

(87

)

 

 

 

Net income (loss) available to common stockholders

$

460

 

 

$

400

 

 

$

1,386

 

 

$

779

 

Basic earnings (loss) per common share:

 

 

 

 

 

 

 

Income (loss) from continuing operations

$

.45

 

 

$

.33

 

 

$

1.21

 

 

$

.64

 

Income (loss) from discontinued operations

 

(.07

)

 

 

 

 

 

(.07

)

 

 

 

Net income (loss) available to common stockholders

$

.38

 

 

$

.33

 

 

$

1.14

 

 

$

.64

 

Weighted-average shares (thousands)

 

1,217,673

 

 

 

1,218,678

 

 

 

1,218,564

 

 

 

1,217,814

 

Diluted earnings (loss) per common share:

 

 

 

 

 

 

 

Income (loss) from continuing operations

$

.45

 

 

$

.33

 

 

$

1.20

 

 

$

.64

 

Income (loss) from discontinued operations

 

(.07

)

 

 

 

 

 

(.07

)

 

 

 

Net income (loss) available to common stockholders

$

.38

 

 

$

.33

 

 

$

1.13

 

 

$

.64

 

Weighted-average shares (thousands)

 

1,219,915

 

 

 

1,222,694

 

 

 

1,223,429

 

 

 

1,221,991

 

The Williams Companies, Inc.

Consolidated Balance Sheet

(Unaudited)

 

 

 

June 30,

2023

 

December 31,

2022

 

 

(Millions, except per-share amounts)

ASSETS

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

551

 

 

$

152

 

Trade accounts and other receivables (net of allowance of $6 at June 30, 2023 and December 31, 2022)

 

 

1,362

 

 

 

2,723

 

Inventories

 

 

259

 

 

 

320

 

Derivative assets

 

 

233

 

 

 

323

 

Other current assets and deferred charges

 

 

234

 

 

 

279

 

Total current assets

 

 

2,639

 

 

 

3,797

 

Investments

 

 

5,046

 

 

 

5,065

 

Property, plant, and equipment

 

 

50,240

 

 

 

47,057

 

Accumulated depreciation and amortization

 

 

(17,894

)

 

 

(16,168

)

Property, plant, and equipment – net.

 

 

32,346

 

 

 

30,889

 

Intangible assets – net of accumulated amortization

 

 

7,573

 

 

 

7,363

 

Regulatory assets, deferred charges, and other

 

 

1,421

 

 

 

1,319

 

Total assets

 

$

49,025

 

 

$

48,433

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

1,146

 

 

$

2,327

 

Derivative liabilities

 

 

143

 

 

 

316

 

Accrued and other current liabilities

 

 

1,218

 

 

 

1,270

 

Commercial paper

 

 

 

 

 

350

 

Long-term debt due within one year

 

 

2,877

 

 

 

627

 

Total current liabilities

 

 

5,384

 

 

 

4,890

 

Long-term debt

 

 

21,532

 

 

 

21,927

 

Deferred income tax liabilities

 

 

3,325

 

 

 

2,887

 

Regulatory liabilities, deferred income, and other

 

 

4,575

 

 

 

4,684

 

Contingent liabilities and commitments

 

 

 

 

Equity:

 

 

 

 

Stockholders’ equity:

 

 

 

 

Preferred stock ($1 par value; 30 million shares authorized at June 30, 2023 and December 31, 2022; 35,000 shares issued at June 30, 2023 and December 31, 2022)

 

 

35

 

 

 

35

 

Common stock ($1 par value; 1,470 million shares authorized at June 30, 2023 and December 31, 2022; 1,256 million shares issued at June 30, 2023 and 1,253 million shares issued at December 31, 2022)

 

 

1,256

 

 

 

1,253

 

Capital in excess of par value

 

 

24,538

 

 

 

24,542

 

Retained deficit

 

 

(12,982

)

 

 

(13,271

)

Accumulated other comprehensive income (loss).

 

 

12

 

 

 

(24

)

Treasury stock, at cost (39 million shares at June 30, 2023 and 35 million shares at December 31, 2022 of common stock)

 

 

(1,180

)

 

 

(1,050

)

Total stockholders’ equity

 

 

11,679

 

 

 

11,485

 

Noncontrolling interests in consolidated subsidiaries

 

 

2,530

 

 

 

2,560

 

Total equity

 

 

14,209

 

 

 

14,045

 

Total liabilities and equity

 

$

49,025

 

 

$

48,433

 

The Williams Companies, Inc.

Consolidated Statement of Cash Flows

(Unaudited)

 

Six Months Ended

June 30,

 

 

2023

 

 

 

2022

 

 

(Millions)

OPERATING ACTIVITIES:

 

Net income (loss)

$

1,451

 

 

$

799

 

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

 

 

 

Depreciation and amortization

 

1,021

 

 

 

1,004

 

Provision (benefit) for deferred income taxes

 

427

 

 

 

90

 

Equity (earnings) losses

 

(307

)

 

 

(299

)

Distributions from equity-method investees

 

418

 

 

 

414

 

Net unrealized (gain) loss from derivative instruments

 

(410

)

 

 

364

 

Inventory write-downs

 

23

 

 

 

12

 

Amortization of stock-based awards

 

40

 

 

 

36

 

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

 

 

 

Accounts receivable

 

1,423

 

 

 

(797

)

Inventories

 

41

 

 

 

(11

)

Other current assets and deferred charges

 

24

 

 

 

(15

)

Accounts payable

 

(1,220

)

 

 

690

 

Accrued and other current liabilities

 

(72

)

 

 

(24

)

Changes in current and noncurrent derivative assets and liabilities

 

119

 

 

 

49

 

Other, including changes in noncurrent assets and liabilities

 

(87

)

 

 

(132

)

Net cash provided (used) by operating activities

 

2,891

 

 

 

2,180

 

FINANCING ACTIVITIES:

 

 

 

Proceeds from (payments of) commercial paper – net

 

(352

)

 

 

1,037

 

Proceeds from long-term debt

 

1,503

 

 

 

5

 

Payments of long-term debt

 

(14

)

 

 

(2,012

)

Proceeds from issuance of common stock

 

4

 

 

 

48

 

Purchases of treasury stock

 

(130

)

 

 

 

Common dividends paid

 

(1,091

)

 

 

(1,035

)

Dividends and distributions paid to noncontrolling interests

 

(112

)

 

 

(95

)

Contributions from noncontrolling interests

 

18

 

 

 

8

 

Payments for debt issuance costs

 

(13

)

 

 

 

Other – net

 

(17

)

 

 

(31

)

Net cash provided (used) by financing activities

 

(204

)

 

 

(2,075

)

INVESTING ACTIVITIES:

 

 

 

Property, plant, and equipment:

 

 

 

Capital expenditures (1)

 

(1,155

)

 

 

(606

)

Dispositions – net

 

(21

)

 

 

(11

)

Contributions in aid of construction

 

18

 

 

 

6

 

Purchases of businesses, net of cash acquired

 

(1,053

)

 

 

(933

)

Purchases of and contributions to equity-method investments

 

(69

)

 

 

(100

)

Other – net

 

(8

)

 

 

(8

)

Net cash provided (used) by investing activities

 

(2,288

)

 

 

(1,652

)

Increase (decrease) in cash and cash equivalents

 

399

 

 

 

(1,547

)

Cash and cash equivalents at beginning of year

 

152

 

 

 

1,680

 

Cash and cash equivalents at end of period

$

551

 

 

$

133

 

_____________

 

 

 

(1) Increases to property, plant, and equipment

$

(1,168

)

 

$

(642

)

Changes in related accounts payable and accrued liabilities

 

13

 

 

 

36

 

Capital expenditures

$

(1,155

)

 

$

(606

)

Transmission & Gulf of Mexico

 

(UNAUDITED)

 

 

2022

 

2023

 

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

Year

 

Regulated interstate natural gas transportation, storage, and other revenues (1)

$

730

 

$

717

 

$

734

 

$

758

 

$

2,939

 

 

$

774

 

$

786

 

$

1,560

 

 

Gathering, processing, storage and transportation revenues

 

82

 

 

84

 

 

99

 

 

100

 

 

365

 

 

 

100

 

 

104

 

 

204

 

 

Other fee revenues (1)

 

5

 

 

5

 

 

4

 

 

7

 

 

21

 

 

 

6

 

 

8

 

 

14

 

 

Commodity margins

 

15

 

 

11

 

 

10

 

 

7

 

 

43

 

 

 

10

 

 

8

 

 

18

 

 

Net unrealized gain (loss) from derivative instruments

 

 

 

 

 

1

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

Operating and administrative costs (1)

 

(202

)

 

(227

)

 

(238

)

 

(239

)

 

(906

)

 

 

(254

)

 

(254

)

 

(508

)

 

Other segment income (expenses) - net (1)

 

19

 

 

17

 

 

(22

)

 

5

 

 

19

 

 

 

26

 

 

31

 

 

57

 

 

Proportional Modified EBITDA of equity-method investments

 

48

 

 

45

 

 

50

 

 

50

 

 

193

 

 

 

53

 

 

48

 

 

101

 

 

Modified EBITDA

 

697

 

 

652

 

 

638

 

 

687

 

 

2,674

 

 

 

715

 

 

731

 

 

1,446

 

 

Adjustments

 

 

 

 

 

33

 

 

13

 

 

46

 

 

 

13

 

 

17

 

 

30

 

 

Adjusted EBITDA

$

697

 

$

652

 

$

671

 

$

700

 

$

2,720

 

 

$

728

 

$

748

 

$

1,476

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistics for Operated Assets

 

 

 

 

 

 

 

 

 

 

Natural Gas Transmission (2)

 

 

 

 

 

 

 

 

 

 

Transcontinental Gas Pipe Line

 

 

 

 

 

 

 

 

 

 

Avg. daily transportation volumes (MMdth)

 

15.0

 

 

13.5

 

 

14.7

 

 

14.2

 

 

14.4

 

 

 

14.3

 

 

13.2

 

 

13.8

 

 

Avg. daily firm reserved capacity (MMdth)

 

19.3

 

 

19.1

 

 

19.2

 

 

19.3

 

 

19.2

 

 

 

19.5

 

 

19.4

 

 

19.4

 

 

Northwest Pipeline LLC

 

 

 

 

 

 

 

 

 

 

Avg. daily transportation volumes (MMdth)

 

2.8

 

 

2.1

 

 

2.0

 

 

2.9

 

 

2.5

 

 

 

3.1

 

 

2.3

 

 

2.7

 

 

Avg. daily firm reserved capacity (MMdth)

 

3.8

 

 

3.8

 

 

3.8

 

 

3.8

 

 

3.8

 

 

 

3.8

 

 

3.8

 

 

3.8

 

 

MountainWest (3)

 

 

 

 

 

 

 

 

 

 

Avg. daily transportation volumes (MMdth)

 

 

 

 

 

 

 

 

 

 

 

 

4.2

 

 

3.2

 

 

3.5

 

 

Avg. daily firm reserved capacity (MMdth)

 

 

 

 

 

 

 

 

 

 

 

 

7.8

 

 

7.5

 

 

7.6

 

 

Gulfstream - Non-consolidated

 

 

 

 

 

 

 

 

 

 

Avg. daily transportation volumes (MMdth)

 

0.9

 

 

1.3

 

 

1.4

 

 

1.1

 

 

1.3

 

 

 

1.0

 

 

1.2

 

 

1.1

 

 

Avg. daily firm reserved capacity (MMdth)

 

1.3

 

 

1.3

 

 

1.4

 

 

1.4

 

 

1.4

 

 

 

1.4

 

 

1.4

 

 

1.4

 

 

Gathering, Processing, and Crude Oil Transportation

 

 

 

 

 

 

 

 

 

 

Consolidated (4)

 

 

 

 

 

 

 

 

 

 

Gathering volumes (Bcf/d)

 

0.30

 

 

0.28

 

 

0.29

 

 

0.28

 

 

0.29

 

 

 

0.28

 

 

0.23

 

 

0.25

 

 

Plant inlet natural gas volumes (Bcf/d)

 

0.48

 

 

0.46

 

 

0.49

 

 

0.46

 

 

0.47

 

 

 

0.43

 

 

0.40

 

 

0.41

 

 

NGL production (Mbbls/d)

 

31

 

 

31

 

 

26

 

 

26

 

 

28

 

 

 

28

 

 

24

 

 

26

 

 

NGL equity sales (Mbbls/d)

 

7

 

 

7

 

 

4

 

 

5

 

 

6

 

 

 

7

 

 

5

 

 

6

 

 

Crude oil transportation volumes (Mbbls/d)

 

110

 

 

124

 

 

125

 

 

118

 

 

119

 

 

 

119

 

 

111

 

 

115

 

 

Non-consolidated (5)

 

 

 

 

 

 

 

 

 

 

Gathering volumes (Bcf/d)

 

0.39

 

 

0.37

 

 

0.41

 

 

0.42

 

 

0.40

 

 

 

0.36

 

 

0.30

 

 

0.33

 

 

Plant inlet natural gas volumes (Bcf/d)

 

0.38

 

 

0.37

 

 

0.41

 

 

0.42

 

 

0.40

 

 

 

0.36

 

 

0.30

 

 

0.33

 

 

NGL production (Mbbls/d)

 

28

 

 

26

 

 

29

 

 

29

 

 

28

 

 

 

28

 

 

21

 

 

24

 

 

NGL equity sales (Mbbls/d)

 

8

 

 

6

 

 

7

 

 

10

 

 

8

 

 

 

8

 

 

3

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Excludes certain amounts associated with revenues and operating costs for tracked or reimbursable charges.

 

(2) Tbtu converted to MMdth at one trillion British thermal units = one million dekatherms.

 

(3) Includes 100% of the volumes associated with the MountainWest Acquisition transmission assets after the purchase on February 14, 2023, including 100% of the volumes associated with the operated equity-method investment White River Hub, LLC. Average volumes were calculated over the period owned.

 

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

 

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

 

Northeast G&P

 

(UNAUDITED)

 

 

2022

 

2023

 

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

Year

 

Gathering, processing, transportation, and fractionation revenues

$

323

 

$

350

 

$

354

 

$

368

 

$

1,395

 

 

$

391

 

$

431

 

$

822

 

 

Other fee revenues (1)

 

27

 

 

27

 

 

27

 

 

46

 

 

127

 

 

 

32

 

 

27

 

 

59

 

 

Commodity margins

 

6

 

 

1

 

 

3

 

 

 

 

10

 

 

 

5

 

 

(1

)

 

4

 

 

Operating and administrative costs (1)

 

(85

)

 

(102

)

 

(101

)

 

(97

)

 

(385

)

 

 

(101

)

 

(101

)

 

(202

)

 

Other segment income (expenses) - net

 

(3

)

 

 

 

(1

)

 

(1

)

 

(5

)

 

 

 

 

 

 

 

 

Proportional Modified EBITDA of equity-method investments

 

150

 

 

174

 

 

182

 

 

148

 

 

654

 

 

 

143

 

 

159

 

 

302

 

 

Modified EBITDA

 

418

 

 

450

 

 

464

 

 

464

 

 

1,796

 

 

 

470

 

 

515

 

 

985

 

 

Adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

418

 

$

450

 

$

464

 

$

464

 

$

1,796

 

 

$

470

 

$

515

 

$

985

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistics for Operated Assets and non-operated Blue Racer Midstream

 

 

 

 

 

 

 

 

 

 

Gathering and Processing

 

 

 

 

 

 

 

 

 

 

Consolidated (2)

 

 

 

 

 

 

 

 

 

 

Gathering volumes (Bcf/d)

 

4.03

 

 

4.19

 

 

4.22

 

 

4.31

 

 

4.19

 

 

 

4.45

 

 

4.63

 

 

4.54

 

 

Plant inlet natural gas volumes (Bcf/d)

 

1.46

 

 

1.70

 

 

1.74

 

 

1.70

 

 

1.65

 

 

 

1.92

 

 

1.79

 

 

1.85

 

 

NGL production (Mbbls/d)

 

110

 

 

118

 

 

125

 

 

127

 

 

120

 

 

 

144

 

 

135

 

 

140

 

 

NGL equity sales (Mbbls/d) (3)

 

2

 

 

1

 

 

1

 

 

1

 

 

1

 

 

 

1

 

 

1

 

 

1

 

 

Non-consolidated (4)

 

 

 

 

 

 

 

 

 

 

Gathering volumes (Bcf/d)

 

6.62

 

 

6.76

 

 

6.58

 

 

6.48

 

 

6.61

 

 

 

6.97

 

 

7.03

 

 

7.00

 

 

Plant inlet natural gas volumes (Bcf/d)

 

0.66

 

 

0.76

 

 

0.66

 

 

0.77

 

 

0.71

 

 

 

0.77

 

 

0.93

 

 

0.85

 

 

NGL production (Mbbls/d)

 

50

 

 

53

 

 

45

 

 

56

 

 

51

 

 

 

54

 

 

64

 

 

59

 

 

NGL equity sales (Mbbls/d)

 

4

 

 

3

 

 

2

 

 

2

 

 

3

 

 

 

4

 

 

5

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Excludes certain amounts associated with revenues and operating costs for reimbursable charges.

 

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

 

(3) 1st Qtr 2023 volumes have been revised for a correction.

 

(4) Includes 100% of the volumes associated with operated equity-method investments, including the Laurel Mountain Midstream partnership; and the Bradford Supply Hub and the Marcellus South Supply Hub within the Appalachia Midstream Services partnership. Also, all periods include non-operated Blue Racer Midstream.

 

West

 

(UNAUDITED)

 

 

2022

 

2023

 

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

Year

 

Net gathering, processing, transportation, storage, and fractionation revenues

$

317

 

$

360

 

$

397

 

$

401

 

$

1,475

 

 

$

382

 

$

373

 

$

755

 

 

Other fee revenues (1)

 

6

 

 

6

 

 

6

 

 

5

 

 

23

 

 

 

5

 

 

7

 

 

12

 

 

Commodity margins

 

23

 

 

25

 

 

27

 

 

27

 

 

102

 

 

 

(24

)

 

18

 

 

(6

)

 

Operating and administrative costs (1)

 

(112

)

 

(133

)

 

(128

)

 

(133

)

 

(506

)

 

 

(115

)

 

(122

)

 

(237

)

 

Other segment income (expenses) - net

 

(1

)

 

(1

)

 

(6

)

 

(7

)

 

(15

)

 

 

23

 

 

(7

)

 

16

 

 

Proportional Modified EBITDA of equity-method investments

 

27

 

 

31

 

 

41

 

 

33

 

 

132

 

 

 

33

 

 

43

 

 

76

 

 

Modified EBITDA

 

260

 

 

288

 

 

337

 

 

326

 

 

1,211

 

 

 

304

 

 

312

 

 

616

 

 

Adjustments

 

 

 

8

 

 

 

 

 

 

8

 

 

 

(18

)

 

 

 

(18

)

 

Adjusted EBITDA

$

260

 

$

296

 

$

337

 

$

326

 

$

1,219

 

 

$

286

 

$

312

 

$

598

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistics for Operated Assets

 

 

 

 

 

 

 

 

 

 

Gathering and Processing

 

 

 

 

 

 

 

 

 

 

Consolidated (2)

 

 

 

 

 

 

 

 

 

 

Gathering volumes (Bcf/d) (3)

 

3.47

 

 

5.14

 

 

5.20

 

 

5.50

 

 

5.19

 

 

 

5.47

 

 

5.51

 

 

5.49

 

 

Plant inlet natural gas volumes (Bcf/d)

 

1.13

 

 

1.14

 

 

1.21

 

 

1.10

 

 

1.15

 

 

 

0.92

 

 

1.06

 

 

0.99

 

 

NGL production (Mbbls/d)

 

47

 

 

49

 

 

45

 

 

32

 

 

43

 

 

 

25

 

 

40

 

 

33

 

 

NGL equity sales (Mbbls/d)

 

17

 

 

18

 

 

13

 

 

7

 

 

14

 

 

 

6

 

 

16

 

 

11

 

 

Non-consolidated (4)

 

 

 

 

 

 

 

 

 

 

Gathering volumes (Bcf/d)

 

0.28

 

 

0.28

 

 

0.29

 

 

0.29

 

 

0.29

 

 

 

0.32

 

 

0.33

 

 

0.32

 

 

Plant inlet natural gas volumes (Bcf/d)

 

0.27

 

 

0.28

 

 

0.29

 

 

0.29

 

 

0.28

 

 

 

0.32

 

 

0.32

 

 

0.32

 

 

NGL production (Mbbls/d)

 

31

 

 

32

 

 

34

 

 

32

 

 

33

 

 

 

37

 

 

38

 

 

38

 

 

NGL and Crude Oil Transportation volumes (Mbbls/d) (5)

 

118

 

 

144

 

 

172

 

 

151

 

 

146

 

 

 

153

 

 

200

 

 

177

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Excludes certain amounts associated with revenues and operating costs for reimbursable charges.

 

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

 

(3) Includes 100% of the volumes associated with the Trace Acquisition gathering assets after the purchase on April 29, 2022. Average volumes were calculated over the period owned.

 

(4) Includes 100% of the volumes associated with operated equity-method investments, including Rocky Mountain Midstream.

 

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

 

Gas & NGL Marketing Services

 

(UNAUDITED)

 

 

2022

 

 

2023

 

 

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

Year

 

Commodity margins

$

100

 

$

23

 

$

39

 

$

161

 

$

323

 

 

$

265

 

$

(2

)

$

263

 

 

Other fee revenues

 

1

 

 

 

 

1

 

 

1

 

 

3

 

 

 

1

 

 

 

 

1

 

 

Net unrealized gain (loss) from derivative instruments

 

(57

)

 

(288

)

 

5

 

 

66

 

 

(274

)

 

 

333

 

 

94

 

 

427

 

 

Operating and administrative costs

 

(31

)

 

(23

)

 

(24

)

 

(18

)

 

(96

)

 

 

(32

)

 

(24

)

 

(56

)

 

Other segment income (expenses) - net

 

 

 

6

 

 

(1

)

 

(1

)

 

4

 

 

 

 

 

 

 

 

 

Modified EBITDA

 

13

 

 

(282

)

 

20

 

 

209

 

 

(40

)

 

 

567

 

 

68

 

 

635

 

 

Adjustments

 

52

 

 

288

 

 

18

 

 

(60

)

 

298

 

 

 

(336

)

 

(84

)

 

(420

)

 

Adjusted EBITDA

$

65

 

$

6

 

$

38

 

$

149

 

$

258

 

 

$

231

 

$

(16

)

$

215

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistics

 

 

 

 

 

 

 

 

 

 

Product Sales Volumes

 

 

 

 

 

 

 

 

 

 

Natural Gas (Bcf/d)

 

7.96

 

 

6.66

 

 

7.11

 

 

7.05

 

 

7.20

 

 

 

7.24

 

 

6.56

 

 

6.90

 

 

NGLs (Mbbls/d)

 

246

 

 

234

 

 

267

 

 

254

 

 

250

 

 

 

234

 

 

239

 

 

236

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

(UNAUDITED)

 

 

2022

 

 

2023

 

 

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

Year

 

Service revenues

$

9

 

$

7

 

$

6

 

$

2

 

$

24

 

 

$

3

 

$

5

 

$

8

 

 

Net realized product sales

 

96

 

 

142

 

 

180

 

 

184

 

 

602

 

 

 

120

 

 

97

 

 

217

 

 

Net unrealized gain (loss) from derivative instruments

 

(66

)

 

47

 

 

29

 

 

15

 

 

25

 

 

 

(6

)

 

(11

)

 

(17

)

 

Operating and administrative costs

 

(33

)

 

(57

)

 

(62

)

 

(59

)

 

(211

)

 

 

(48

)

 

(54

)

 

(102

)

 

Other segment income (expenses) - net

 

(1

)

 

 

 

(13

)

 

8

 

 

(6

)

 

 

5

 

 

5

 

 

10

 

 

Proportional Modified EBITDA of equity-method investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

(1

)

 

Modified EBITDA

 

5

 

 

139

 

 

140

 

 

150

 

 

434

 

 

 

74

 

 

41

 

 

115

 

 

Adjustments

 

66

 

 

(47

)

 

(13

)

 

(15

)

 

(9

)

 

 

6

 

 

11

 

 

17

 

 

Adjusted EBITDA

$

71

 

$

92

 

$

127

 

$

135

 

$

425

 

 

$

80

 

$

52

 

$

132

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistics

 

 

 

 

 

 

 

 

 

 

Net Product Sales Volumes

 

 

 

 

 

 

 

 

 

 

Natural Gas (Bcf/d)

 

0.12

 

 

0.19

 

 

0.27

 

 

0.31

 

 

0.22

 

 

 

0.26

 

 

0.29

 

 

0.27

 

 

NGLs (Mbbls/d)

 

7

 

 

7

 

 

8

 

 

7

 

 

7

 

 

 

3

 

 

6

 

 

4

 

 

Crude Oil (Mbbls/d)

 

2

 

 

3

 

 

2

 

 

2

 

 

2

 

 

 

1

 

 

3

 

 

2

 

 

 

 

Capital Expenditures and Investments

 

(UNAUDITED)

 

 

2022

 

 

2023

 

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

 

2nd Qtr

Year

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

 

 

 

 

Transmission & Gulf of Mexico

$

125

 

$

129

 

$

637

 

$

358

 

$

1,249

 

 

$

205

 

$

263

 

$

468

 

 

Northeast G&P

 

40

 

 

30

 

 

52

 

 

92

 

 

214

 

 

 

99

 

 

74

 

 

173

 

 

West

 

61

 

 

82

 

 

94

 

 

226

 

 

463

 

 

 

169

 

 

197

 

 

366

 

 

Other

 

65

 

 

74

 

 

58

 

 

130

 

 

327

 

 

 

72

 

 

76

 

 

148

 

 

Total (1)

$

291

 

$

315

 

$

841

 

$

806

 

$

2,253

 

 

$

545

 

$

610

 

$

1,155

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of and contributions to equity-method investments:

 

 

 

 

 

 

 

 

 

 

 

Transmission & Gulf of Mexico

$

16

 

$

26

 

$

11

 

$

17

 

$

70

 

 

$

8

 

$

18

 

$

26

 

 

Northeast G&P

 

32

 

 

18

 

 

28

 

 

8

 

 

86

 

 

 

31

 

 

12

 

 

43

 

 

Other

 

8

 

 

 

 

1

 

 

1

 

 

10

 

 

 

 

 

 

 

 

 

Total

$

56

 

$

44

 

$

40

 

$

26

 

$

166

 

 

$

39

 

$

30

 

$

69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary:

 

 

 

 

 

 

 

 

 

 

 

Transmission & Gulf of Mexico

$

141

 

$

155

 

$

648

 

$

375

 

$

1,319

 

 

$

213

 

$

281

 

$

494

 

 

Northeast G&P

 

72

 

 

48

 

 

80

 

 

100

 

 

300

 

 

 

130

 

 

86

 

 

216

 

 

West

 

61

 

 

82

 

 

94

 

 

226

 

 

463

 

 

 

169

 

 

197

 

 

366

 

 

Other

 

73

 

 

74

 

 

59

 

 

131

 

 

337

 

 

 

72

 

 

76

 

 

148

 

 

Total

$

347

 

$

359

 

$

881

 

$

832

 

$

2,419

 

 

$

584

 

$

640

 

$

1,224

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital investments:

 

 

 

 

 

 

 

 

 

 

 

Increases to property, plant, and equipment

$

260

 

$

382

 

$

907

 

$

845

 

$

2,394

 

 

$

484

 

$

684

 

$

1,168

 

 

Purchases of businesses, net of cash acquired

 

 

 

933

 

 

 

 

 

 

933

 

 

 

1,056

 

 

(3

)

 

1,053

 

 

Purchases of and contributions to equity-method investments

 

56

 

 

44

 

 

40

 

 

26

 

 

166

 

 

 

39

 

 

30

 

 

69

 

 

Purchases of other long-term investments

 

 

 

3

 

 

3

 

 

5

 

 

11

 

 

 

2

 

 

1

 

 

3

 

 

Total

$

316

 

$

1,362

 

$

950

 

$

876

 

$

3,504

 

 

$

1,581

 

$

712

 

$

2,293

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Increases to property, plant, and equipment

$

260

 

$

382

 

$

907

 

$

845

 

$

2,394

 

 

$

484

 

$

684

 

$

1,168

 

 

Changes in related accounts payable and accrued liabilities

 

31

 

 

(67

)

 

(66

)

 

(39

)

 

(141

)

 

 

61

 

 

(74

)

 

(13

)

 

Capital expenditures

$

291

 

$

315

 

$

841

 

$

806

 

$

2,253

 

 

$

545

 

$

610

 

$

1,155

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contributions from noncontrolling interests

$

3

 

$

5

 

$

7

 

$

3

 

$

18

 

 

$

3

 

$

15

 

$

18

 

 

Contributions in aid of construction

$

(3

)

$

9

 

$

2

 

$

4

 

$

12

 

 

$

11

 

$

7

 

$

18

 

 

Proceeds from disposition of equity-method investments

$

 

$

 

$

7

 

$

 

$

7

 

 

$

 

$

 

$

 

 

Non-GAAP Measures

This news release and accompanying materials may include certain financial measures – adjusted EBITDA, adjusted income (“earnings”), adjusted earnings per share, available funds from operations 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. Such items are excluded from net income to determine adjusted income and adjusted earnings per share. Management believes this measure provides investors meaningful insight into results from ongoing operations.

Available funds from operations (AFFO) is defined as cash flow from operations excluding the effect of changes in working capital and certain other changes in noncurrent assets and liabilities, reduced by preferred dividends and net distributions to noncontrolling interests. AFFO may be adjusted to exclude certain items that we characterize as unrepresentative of our ongoing operations.

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 available funds from operations 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 Non-GAAP Adjusted Income

 

(UNAUDITED)

 

 

2022

 

 

2023

 

 

(Dollars in millions, except per-share amounts)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

Year

 

 

 

 

 

 

 

 

 

 

 

 

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

$

379

 

$

400

 

$

599

 

$

668

 

$

2,046

 

 

$

926

 

$

547

 

$

1,473

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations - diluted earnings (loss) per common share (1)

$

.31

 

$

.33

 

$

.49

 

$

.55

 

$

1.67

 

 

$

.76

 

$

.45

 

$

1.20

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Transmission & Gulf of Mexico

 

 

 

 

 

 

 

 

 

 

Loss related to Eminence storage cavern abandonments and monitoring

$

 

$

 

$

19

 

$

12

 

$

31

 

 

$

 

$

 

$

 

 

Regulatory liability charges associated with decrease in Transco’s estimated deferred state income tax rate

 

 

 

 

 

15

 

 

 

 

15

 

 

 

 

 

 

 

 

 

Net unrealized (gain) loss from derivative instruments

 

 

 

 

 

(1

)

 

1

 

 

 

 

 

 

 

 

 

 

 

MountainWest acquisition and transition-related costs

 

 

 

 

 

 

 

 

 

 

 

 

13

 

 

17

 

 

30

 

 

Total Transmission & Gulf of Mexico adjustments

 

 

 

 

 

33

 

 

13

 

 

46

 

 

 

13

 

 

17

 

 

30

 

 

West

 

 

 

 

 

 

 

 

 

 

Trace acquisition costs

 

 

 

8

 

 

 

 

 

 

8

 

 

 

 

 

 

 

 

 

Gain from contract settlement

 

 

 

 

 

 

 

 

 

 

 

 

(18

)

 

 

 

(18

)

 

Total West adjustments

 

 

 

8

 

 

 

 

 

 

8

 

 

 

(18

)

 

 

 

(18

)

 

Gas & NGL Marketing Services

 

 

 

 

 

 

 

 

 

 

Amortization of purchase accounting inventory fair value adjustment

 

15

 

 

 

 

 

 

 

 

15

 

 

 

 

 

 

 

 

 

Impact of volatility on NGL linefill transactions

 

(20

)

 

 

 

23

 

 

6

 

 

9

 

 

 

(3

)

 

10

 

 

7

 

 

Net unrealized (gain) loss from derivative instruments

 

57

 

 

288

 

 

(5

)

 

(66

)

 

274

 

 

 

(333

)

 

(94

)

 

(427

)

 

Total Gas & NGL Marketing Services adjustments

 

52

 

 

288

 

 

18

 

 

(60

)

 

298

 

 

 

(336

)

 

(84

)

 

(420

)

 

Other

 

 

 

 

 

 

 

 

 

 

Regulatory liability charge associated with decrease in Transco’s estimated deferred state income tax rate

 

 

 

 

 

5

 

 

 

 

5

 

 

 

 

 

 

 

 

 

Net unrealized (gain) loss from derivative instruments

 

66

 

 

(47

)

 

(29

)

 

(15

)

 

(25

)

 

 

6

 

 

11

 

 

17

 

 

Accrual for loss contingencies

 

 

 

 

 

11

 

 

 

 

11

 

 

 

 

 

 

 

 

 

Total Other adjustments

 

66

 

 

(47

)

 

(13

)

 

(15

)

 

(9

)

 

 

6

 

 

11

 

 

17

 

 

Adjustments included in Modified EBITDA

 

118

 

 

249

 

 

38

 

 

(62

)

 

343

 

 

 

(335

)

 

(56

)

 

(391

)

 

Adjustments below Modified EBITDA

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets from Sequent acquisition

 

42

 

 

41

 

 

42

 

 

42

 

 

167

 

 

 

15

 

 

14

 

 

29

 

 

Depreciation adjustment related to Eminence storage cavern abandonments

 

 

 

 

 

(1

)

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

42

 

 

41

 

 

41

 

 

42

 

 

166

 

 

 

15

 

 

14

 

 

29

 

 

Total adjustments

 

160

 

 

290

 

 

79

 

 

(20

)

 

509

 

 

 

(320

)

 

(42

)

 

(362

)

 

Less tax effect for above items

 

(40

)

 

(72

)

 

(17

)

 

5

 

 

(124

)

 

 

78

 

 

10

 

 

88

 

 

Adjustments for tax-related items (2)

 

 

 

(134

)

 

(69

)

 

 

 

(203

)

 

 

 

 

 

 

 

 

Adjusted income from continuing operations available to common stockholders

$

499

 

$

484

 

$

592

 

$

653

 

$

2,228

 

 

$

684

 

$

515

 

$

1,199

 

 

Adjusted income from continuing operations - diluted earnings per common share (1)

$

.41

 

$

.40

 

$

.48

 

$

.53

 

$

1.82

 

 

$

.56

 

$

.42

 

$

.98

 

 

Weighted-average shares - diluted (thousands)

 

1,221,279

 

 

1,222,694

 

 

1,222,472

 

 

1,224,212

 

 

1,222,672

 

 

 

1,225,781

 

 

1,219,915

 

 

1,223,429

 

 

(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 second quarter of 2022 includes adjustments for the reversal of valuation allowance due to the expected utilization of certain deferred income tax assets and previously unrecognized tax benefits from the resolution of certain federal income tax audits. The third quarter of 2022 includes an unfavorable adjustment to reverse the net benefit primarily associated with a significant decrease in our estimated deferred state income tax rate, partially offset by an unfavorable revision to a state net operating loss carryforward.

 

Reconciliation of "Net Income (Loss)" to “Modified EBITDA” and Non-GAAP “Adjusted EBITDA”

 

(UNAUDITED)

 

 

2022

 

 

2023

 

 

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

Year

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

392

 

$

407

 

$

621

 

$

697

 

$

2,117

 

 

$

957

 

$

494

 

$

1,451

 

 

Provision (benefit) for income taxes

 

118

 

 

(45

)

 

96

 

 

256

 

 

425

 

 

 

284

 

 

175

 

 

459

 

 

Interest expense

 

286

 

 

281

 

 

291

 

 

289

 

 

1,147

 

 

 

294

 

 

306

 

 

600

 

 

Equity (earnings) losses

 

(136

)

 

(163

)

 

(193

)

 

(145

)

 

(637

)

 

 

(147

)

 

(160

)

 

(307

)

 

Other investing (income) loss - net

 

(1

)

 

(2

)

 

(1

)

 

(12

)

 

(16

)

 

 

(8

)

 

(13

)

 

(21

)

 

Proportional Modified EBITDA of equity-method investments

 

225

 

 

250

 

 

273

 

 

231

 

 

979

 

 

 

229

 

 

249

 

 

478

 

 

Depreciation and amortization expenses

 

498

 

 

506

 

 

500

 

 

505

 

 

2,009

 

 

 

506

 

 

515

 

 

1,021

 

 

Accretion expense associated with asset retirement obligations for nonregulated operations

 

11

 

 

13

 

 

12

 

 

15

 

 

51

 

 

 

15

 

 

14

 

 

29

 

 

(Income) loss from discontinued operations, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

87

 

 

87

 

 

Modified EBITDA

$

1,393

 

$

1,247

 

$

1,599

 

$

1,836

 

$

6,075

 

 

$

2,130

 

$

1,667

 

$

3,797

 

 

 

 

 

 

 

 

 

 

 

 

 

Transmission & Gulf of Mexico

$

697

 

$

652

 

$

638

 

$

687

 

$

2,674

 

 

$

715

 

$

731

 

$

1,446

 

 

Northeast G&P

 

418

 

 

450

 

 

464

 

 

464

 

 

1,796

 

 

 

470

 

 

515

 

 

985

 

 

West

 

260

 

 

288

 

 

337

 

 

326

 

 

1,211

 

 

 

304

 

 

312

 

 

616

 

 

Gas & NGL Marketing Services

 

13

 

 

(282

)

 

20

 

 

209

 

 

(40

)

 

 

567

 

 

68

 

 

635

 

 

Other

 

5

 

 

139

 

 

140

 

 

150

 

 

434

 

 

 

74

 

 

41

 

 

115

 

 

Total Modified EBITDA

$

1,393

 

$

1,247

 

$

1,599

 

$

1,836

 

$

6,075

 

 

$

2,130

 

$

1,667

 

$

3,797

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments (1):

 

 

 

 

 

 

 

 

 

 

Transmission & Gulf of Mexico

$

 

$

 

$

33

 

$

13

 

$

46

 

 

$

13

 

$

17

 

$

30

 

 

West

 

 

 

8

 

 

 

 

 

 

8

 

 

 

(18

)

 

 

 

(18

)

 

Gas & NGL Marketing Services

 

52

 

 

288

 

 

18

 

 

(60

)

 

298

 

 

 

(336

)

 

(84

)

 

(420

)

 

Other

 

66

 

 

(47

)

 

(13

)

 

(15

)

 

(9

)

 

 

6

 

 

11

 

 

17

 

 

Total Adjustments

$

118

 

$

249

 

$

38

 

$

(62

)

$

343

 

 

$

(335

)

$

(56

)

$

(391

)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

Transmission & Gulf of Mexico

$

697

 

$

652

 

$

671

 

$

700

 

$

2,720

 

 

$

728

 

$

748

 

$

1,476

 

 

Northeast G&P

 

418

 

 

450

 

 

464

 

 

464

 

 

1,796

 

 

 

470

 

 

515

 

 

985

 

 

West

 

260

 

 

296

 

 

337

 

 

326

 

 

1,219

 

 

 

286

 

 

312

 

 

598

 

 

Gas & NGL Marketing Services

 

65

 

 

6

 

 

38

 

 

149

 

 

258

 

 

 

231

 

 

(16

)

 

215

 

 

Other

 

71

 

 

92

 

 

127

 

 

135

 

 

425

 

 

 

80

 

 

52

 

 

132

 

 

Total Adjusted EBITDA

$

1,511

 

$

1,496

 

$

1,637

 

$

1,774

 

$

6,418

 

 

$

1,795

 

$

1,611

 

$

3,406

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Adjustments by segment are detailed in the "Reconciliation of Income (Loss) from Continuing Operations Attributable to The Williams Companies, Inc. to Non-GAAP Adjusted Income," which is also included in these materials.

 

Reconciliation of Cash Flow from Operating Activities to Available Funds from Operations (AFFO)

 

(UNAUDITED)

 

 

2022

 

 

2023

 

 

(Dollars in millions, except coverage ratios)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

 

1st Qtr

2nd Qtr

Year

 

 

 

 

 

 

 

 

 

 

 

 

The Williams Companies, Inc.

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP "Net cash provided (used) by operating activities" to Non-GAAP "Available funds from operations"

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided (used) by operating activities

$

1,082

 

$

1,098

 

$

1,490

 

$

1,219

 

$

4,889

 

 

$

1,514

 

$

1,377

 

$

2,891

 

 

Exclude: Cash (provided) used by changes in:

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

3

 

 

794

 

 

(125

)

 

61

 

 

733

 

 

 

(1,269

)

 

(154

)

 

(1,423

)

 

Inventories, including write-downs

 

(178

)

 

177

 

 

77

 

 

(127

)

 

(51

)

 

 

(45

)

 

(19

)

 

(64

)

 

Other current assets and deferred charges

 

65

 

 

(50

)

 

47

 

 

(29

)

 

33

 

 

 

4

 

 

(28

)

 

(24

)

 

Accounts payable

 

138

 

 

(828

)

 

(53

)

 

333

 

 

(410

)

 

 

1,017

 

 

203