North American energy firm
Williams Companies Inc.
(
WMB
) reported weak fourth-quarter 2012 results, hamstrung by lower
natural gas liquid (NGL) margins along with higher development
cost related to earlier acquisition.
Earnings per share - excluding special items - came in at 25
cents, below the Zacks Consensus Estimate of 26 cents and also
down from the year-ago period adjusted profit of 36 cents.
Revenues of $1,900.0 million were down 9.6% from the fourth
quarter of 2011 and were also short of our projection of $2,105.0
million.
Segmental Analysis
Williams Partners:
This segment reported adjusted operating profit of $449.0 million
in the quarter, down from the year-ago level of $542.0 million.
Segment performance was hurt by deteriorating NGL prices, coupled
with rising expenses.
Williams NGL & Petchem Services:
The unit registered a quarterly adjusted operating profit of
$27.0 million, smaller than the $35.0 million recorded in the
fourth quarter of 2011. Decline in Canadian NGL and propylene
product margins, partially offset by increased propylene sales
volumes, lowered the quarter results.
Other:
The segment incurred adjusted loss of $12.0 million, against the
prior-year quarter profit of $1.0 million.
Capital Expenditure & Balance Sheet
During the quarter, Williams' capital expenditure was $877.0
million, bringing the full-year spending to $2,529.0 million.
As of Dec 31, 2012, the company had long-term debt of $10,735.0
million, representing debt-to-capitalization ratio of 69.3%.
Williams has a current cash balance of about $839.0 million.
Guidance
For 2013, Williams guided toward earnings per share in the range
of 75 cents-$1.15 (indicating a mid-point of 95 cents). The same
for 2014 is projected to be between $1.20 and $1.70 (midpoint is
$1.45). The influence of lower expected commodity margins will
likely put pressure on the company's earnings in the next two
years.
Williams expects to generate total adjusted operating profit of
$1,700-$2,250 million in 2013 and $2,475-$3,175 million in 2014.
Capital and investment expenses are projected to be in the range
of $3,975-$4,575 million in 2013, while for 2014 it is expected
to be between $2,400 million and $3,100 million.
Williams also reaffirmed its pledge to hike dividend payout by
20% annually through 2014.
Stocks to Consider
Williams currently carries a Zacks Rank #3 (Hold), implying that
it is expected to perform in line with the broader U.S. equity
market over the next one to three months.
Meanwhile, one can look at other energy production/pipeline
entities like
Atlas Energy L.P.
(
ATLS
),
Crestwood Midstream Partners L.P.
(
CMLP
) and
SemGroup Corp.
(
SEMG
) as attractive investments. All these firms - sporting a Zacks
Rank #1 (Strong Buy) - offer value and are worth accumulating at
current levels.
ATLAS ENERGY LP (ATLS): Free Stock Analysis
Report
CRESTWOOD MIDST (CMLP): Free Stock Analysis
Report
SEMGROUP CORP-A (SEMG): Free Stock Analysis
Report
WILLIAMS COS (WMB): Free Stock Analysis
Report
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