Williams Companies, Inc. (The) (WMB)

WMB 
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Williams Companies (WMB)

Q4 2011 Earnings Call

February 23, 2012 9:30 am ET

Executives

Travis N. Campbell - Head of Investor Relations

Alan S. Armstrong - Chief Executive Officer, President, Director, President of Midstream Gathering & Processing, Chairman of Williams Partners GP LLC and Chief Executive Officer of Williams Partners GP LLC

Rory Miller - Senior Vice President of Midstream

Randall L. Barnard - Senior Vice President of Gas Pipeline

Donald R. Chappel - Chief Financial Officer and Senior Vice President

Analysts

Craig Shere - Tuohy Brothers Investment Research, Inc.

Sharon Lui - Wells Fargo Securities, LLC, Research Division

Theodore Durbin - Goldman Sachs Group Inc., Research Division

Brad Olsen - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division

Carl L. Kirst - BMO Capital Markets U.S.

Rebecca Followill - U.S. Capital Advisors LLC, Research Division

Presentation

Travis N. Campbell

Good day, everyone. I'm Travis Campbell, and I head up the Investor Relations team here at Williams. Before I turn it over to Alan Armstrong, let me go through a few housekeeping items. Today, we put on our website, williams.com, the slides that Alan will shortly be discussing. You can download those slides for viewing and a podcast of his remarks, if you desire. As always, we thank you for your interest in the company. In a minute, Alan Armstrong, our President and CEO, will review the slides that we have this quarter. Tomorrow, our business units heads and Don Chappel will be available to respond to questions on our analyst call in the morning at 9:30 Eastern Time.

You'll notice that all the results and guidance in today's slides, including the EPS numbers, are presented excluding WPX. Be aware that this is different from the EPS guidance given on the third quarter slides. Don't let this confuse you because numbers on the Street have included the former E&P company and results presented today do not.

At the beginning of the slide deck are the forward-looking statements which are included on Slide #2 and Slide #3. These are important and integral to all of our remarks. You should review those. Also included are various non-GAAP numbers that have been reconciled back to generally accepted accounting principles. Those reconciliation schedules are available and follow the presentation.

So with that, I'll turn it over to Alan.

Alan S. Armstrong

Great. Thank you, Travis, and good morning, everyone. A lot of great information to go through here this morning and glad we've got the context set clear here now . Some of the things I'll be hitting on this morning here, first of all, talking about our 2011 performance, and then I'll work through some of the rapidly expanding growth capital that we've got out there and a lot of the projects that are behind that capital expansion. And then I will move to the guidance for 2012 and '13, along with an updated commodity price deck that reflects our latest thinking about the commodities environment that we look forward to in '12 and '13.

First of all though, before we get into that, I want to remind you, certainly, we could not be more excited about Williams going forward and the way we're positioned in what we think are definitely the right assets, great markets and we certainly are excited about the strategy and how that is performing for us. Also, our MLP structure continues to fuel our dividend growth at WMB and allows us to continue to raise capital in a very cost-efficient manner for Williams shareholders and our high-dividend payout expect an increase every quarter now as we go forward rather than either annual or semiannually. We now have laid out our policy to increase that and are going to be increasing that at a rate of about 7/8 of $0.01. And that equates to a December '11 number versus a December '12, will give us a 14% increase in our annual dividend growth from '11 versus '12.

So we continue to be very excited about our ability to grow the dividend. We think it's extremely transparent where that growth is coming from. And as we continue to add more and more capital projects to this, we expect to even be able to expand that further. We continue to be very committed to our investment grade credit as well.

Okay, moving on here to Slide 5. Great financial performance for 2011, a 37% growth in our adjusted net income. That was $734 million versus $537 million from our continuing ops. Very strong business performance, growing at a clip of about 27% on our adjusted segment profit. And that was driven by a 24% increase in Williams Partners and a 67% increase in our Midstream Canada and olefins.

Some of the drivers there, certainly, in the fee-based business, we grew our fee-based revenues by 12% in Williams Partners and a lot of that volume growth is coming from our Marcellus business, as well as our Deepwater business. The higher NGL frac spreads also were a driver for 2011, and our NGL production volumes were up. But as some of our contracts continue to roll into a fee-based business, our NGL equity volumes were flat. So our business is growing but more and more of our revenues are coming from fee-based business.

We certainly, on the Deepwater Gulf business, as I mentioned, not only did we see growth in revenues for 2011, but we also signed up 2 very significant growth projects that will come on in 2014 and beyond, and that is the Keathley Canyon project and as well, the GulfStar FPS. And I'll speak a little bit more about that later.

Our Gas Pipelines continued to grow as well. And really, the big projects for the gas pipelines, there was actually 4 new major expansions that came on in just during 2011. And most of these projects started up in the end of -- latter part of the year, and about $67 million in increased revenues from those projects.

Read the rest of this transcript for free on seekingalpha.com