North American energy firm,
Williams Companies Inc.
) reported better-than-expected second-quarter 2013 earnings,
aided by an improved production margin of olefins along with
increased fee-based revenue.
Earnings per share (EPS) - excluding special items - came in at
19 cents, above the Zacks Consensus Estimate of 15 cents.
However, the EPS decreased from the year-ago adjusted profit of
22 cents due to a significant fall in natural gas liquid (NGL)
Revenues of $1,767.0 million were down 4.3% from second quarter
of 2012 and short of our $1,805.0 million projection. Lower
product sales in the Williams Partners unit affected the results.
This segment reported adjusted operating profit of $404.0 million
in the quarter, unchanged from the year-ago quarter. Segment
performance was favored by increased fee-based revenues from
transportation, gathering and processing. These factors were
offset by decreased NGL margins.
Williams NGL & Petchem Services:
The unit registered quarterly adjusted operating profit of $22.0
million, higher than $16.0 million in the second quarter of 2012.
Increase in Canadian NGL product margins aided the results, which
is partially offset by higher operating and maintenance expenses.
Access Midstream Partners:
The segment reported an adjusted operating profit of $3.0
The segment incurred adjusted profit of $2.0 million, higher than
the year-ago adjusted profit of $1.0 million.
Capital Expenditure & Balance Sheet
During the quarter, Williams' capital expenditure was $817.0
million. As of Jun 30, 2013, the company had long-term debt of
$10,359.0 million, representing a debt-to-capitalization ratio of
70.2%. Williams has a cash balance of about $824.0 million.
For 2013, Williams guided EPS in the range of 70-80 cents
(indicating a mid-point of 75 cents). The same for 2014 is
projected between $1.00 and $1.30 (mid-point $1.55). For 2015,
Williams projects EPS of $1.35 to $1.75 with a mid-point of
Williams expects to generate total adjusted operating profit of
$1,705.0-1,835.0 million in 2013, $2,260.0 -$2,715.0 million in
2014 and $2,860−$3,470.0 million in 2015.
Capital and investment expenses are projected at
$4,145.0-$4,795.0 million for 2013, $3,985.0-$4,865.0 million for
2014 and $3,545.0-$4,575.0 million for 2015.
Additionally, Williams projects adjusted operating profit
including depreciation and amortization to grow 60% between 2013
CHENIERE ENERGY (CQP): Get Free Report
SEMGROUP CORP-A (SEMG): Free Stock Analysis
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WILLIAMS COS (WMB): Free Stock Analysis
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Williams maintained its previously announced annual dividend
payout growth of 20% from 2013 to 2015. The company believes that
significant growth in cash flows from its Williams Partners,
Williams NGL & Petchem Services and Access Midstream Partners
units will aid dividend growth.
Stocks to Consider
Williams currently carries a Zacks Rank #5 (Strong Sell),
implying that it is expected to significantly underperform the
broader U.S. equity market over the next one to three months.
Meanwhile, one can look at other energy production/pipeline
Cheniere Energy Partners LP
Western Gas Partners LP
) as attractive investments. All these firms carry a Zacks Rank