North American energy firm
Williams Companies Inc.
) reported weak fourth-quarter 2012 results, hamstrung by lower
natural gas liquid (NGL) margins along with higher development
cost related to earlier acquisition.
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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
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.
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.
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
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
Atlas Energy L.P.
Crestwood Midstream Partners L.P.
) as attractive investments. All these firms - sporting a Zacks
Rank #1 (Strong Buy) - offer value and are worth accumulating at