Williams' (WMB) Shares Barely Move Since Q2 Earnings Beat

The Williams Companies, Inc. WMB shares have gone up by a mere 0.9% since its second-quarter earnings announcement on Aug 1.

This slight rise, however, could be attributed to the Oklahoma-based energy infrastructure provider posting earnings for the reported quarter that outperformed the consensus mark.

Behind the Earnings Headlines

The Williams Companies reported second-quarter 2022 adjusted earnings per share of 40 cents, beating the Zacks Consensus Estimate of 37 cents and surpassing the year-earlier period’s profit of 27 cents per share.

The outperformance was due to higher-than-expected contributions from a couple of segments. Adjusted EBITDA from the Others segment totaled $92 million, ahead of the Zacks Consensus Estimate of $81 million. Adjusted EBITDA increased year over year by 28.1% in the West unit.

Meanwhile, in the quarter ended Jun 30, Williams’ revenues of $2.49 billion missed the Zacks Consensus Estimate of $3 billion but outperformed the last year’s second-quarter revenues of $2.28 billion, which could be attributed to increased product sales.

Key Takeaways

Adjusted EBITDA was $1.49 billion in the quarter under review, reflecting an increase of 13.6% from the corresponding period of 2021. Cash flow from operations totaled $1.09 billion, up 3.8% from the prior-year period.

Segmental Analysis

Transmission & Gulf of Mexico: Comprising WMB’s massive Transco pipeline system and Northwest Pipeline, the segment generated adjusted EBITDA of $652 million, rising only 0.6% from the year-ago quarter. This unit’s performance was largely driven by higher service revenues, primarily at Transco, largely from the Leidy South expansion project.

West: This segment includes the gathering and processing assets in the Western region of the United States. It delivered adjusted EBITDA of $296 million, 32.7% higher than the $223 million recorded in the year-earlier quarter. The improvement in results was primarily due to the Trace Midstream acquisition, which closed on Apr 29, as well as higher commodity-based rates and higher Haynesville gathering volumes.

Northeast G&P: Engaged in natural gas gathering and processing, along with the NGL fractionation business in the Marcellus and Utica shale regions, the segment generated adjusted EBITDA of $450 million, up almost 10% from the prior-year quarter’s $409 million. This uptick was driven by top-line Gathering and Processing revenue growth on slightly higher volumes. The G&P rate growth was supported by a combination of factors, including higher commodity-based rates, annual fee escalations and other expansion-related fee increases.

Gas & NGL Marketing Services: This unit generated adjusted EBITDA of $6 million, down 25% from the prior-year quarter’s $8 million.  The result of this segment was impacted by higher commodity margins, more than offset by the absence of a favorable impact in 2021 from Winter Storm Uri and higher administrative costs associated with the Sequent business acquired in July 2021.

Williams Companies, Inc. The Price, Consensus and EPS Surprise

Williams Companies, Inc. The Price, Consensus and EPS Surprise

Williams Companies, Inc. The price-consensus-eps-surprise-chart | Williams Companies, Inc. The Quote

Costs, Capex & Balance Sheet

In the reported quarter, total costs and expenses of $2.01 billion rose by almost 20% compared with the year-ago quarter’s figure of $1.68 billion.

Williams’ total capital expenditure was $1.36 billion in the second quarter, up from $460 million a year ago. As of Jun 30, 2022, the company had cash and cash equivalents of $133 million and a long-term debt of $20.8 billion, with a debt-to-capitalization of almost 65%.

2022 Guidance

WMB raised its full-year adjusted EBITDA guidance and now expects 2022 adjusted EBITDA in the range of $6.1 billion-$6.4 billion, a $450-million midpoint increase from the earlier guidance range of $5.9-$6.2 billion, with growth capital spending still anticipated in the range of $2.25 billion-$2.35 billion. Further, Williams expects to achieve a leverage ratio midpoint of 3.6X, lower than the original guidance of 3.8X.

The company maintained its maintenance capital expenditure guidance between $650 million and $750 million, including the capital for emissions reduction and modernization initiatives.

Zacks Rank

Williams currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Snapshot of a Few Energy Players

TotalEnergies SE TTE reported second-quarter 2022 operating earnings of $3.75 per share, meeting the Zacks Consensus Estimate. The improvement was due to an increase in commodity prices.

In the second quarter of 2022, TotalEnergies acquired $2,464 million worth of assets and sold assets valued at $388 million. TTE bought back shares worth $2 billion in the second quarter. TotalEnergies expects to invest $16 billion in 2022, out of which 25% will be allocated to further strengthen renewable operations and electricity.

Shell plc SHEL reported second-quarter earnings per ADS (on a current cost of supplies basis, excluding items — the market’s preferred measure) of $3.06. The bottom line beat the Zacks Consensus Estimate of $2.91 due to stronger commodity prices and refining margins.

Shell has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. The company currently has a Zacks Style Score of A for Value, Growth and Momentum. SHEL is expected to see earnings growth of 130.5% in 2022.

Chevron Corporation CVX reported adjusted second-quarter earnings per share of $5.82, beating the Zacks Consensus Estimate of $5.02. The outperformance was driven by robust commodity prices and product margins, which propelled both CVX’s segments to record better-than-expected bottom-line results.

As of Jun 30, Chevron had $12 billion in cash and cash equivalents and total debt of $26.2 billion, with a debt-to-total capitalization of 14.6%. Further, CVX paid out $2.8 billion in dividends and bought back $2.5 billion worth of shares in the second quarter.

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