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Williams Companies Misses on Q2 Earnings, Guidance Intact - Analyst Blog

North American energy firm, Williams Companies Inc.WMB reported second-quarter 2015 adjusted earnings from continuing operations of 15 cents per share, which widely missed the Zacks Consensus Estimate of 27 cents. The bottom line also deteriorated from the year-ago quarter adjusted figure of 23 cents.

The Williams Companies Inc. - Earnings Surprise | FindTheBest

For the quarter ended Jun 30, Williams Companies reported revenues of $1,839 million, down 9.6% year over year. Moreover, the top line failed to surpass the Zacks Consensus Estimate of $2,185 million.

Significant higher operating expenses along with decreased natural gas liquid (NGL) margin hurt the results.

Segmental Analysis

Williams Partners: This segment reported adjusted operating profit of $1,008 million in the quarter, up 40.6% from $717 million in the year-ago quarter. Significant contribution from Access Midstream following the merger along with new fee-based revenues from the Gulfstar One and Transco expansion projects supported the results. A partial dampener came in the form of a decreased NGL margin.

Williams NGL & Petchem Services: The unit registered adjusted operating loss of $3 million, narrower than the year-ago quarter loss of $7 million.

Other: The segment posted adjusted operating profit of $12 million, down 80% from the year-ago quarter profit of $60 million. During the second quarter of last year, this segment had generated $53 million earnings from the company's equity investment in Access Midstream.

Operating and Maintenance Expenses

Operating and maintenance expenses were recorded at $437 million, almost 42% higher than $308 million in the second quarter of 2014.

Capital Expenditure & Balance Sheet

During the reported quarter, Williams Companies' capital expenditure came in at $822 million. As of Jun 30, 2015, the company had long-term debt of $21,285 million, representing a debt-to-capitalization ratio of 74.7%. Williams Companies has a cash balance of about $204 million.

Guidance

Capital and investment expenditures' projection are maintained at $3,960-$4,590 million for 2015, $3,300-$3,910 million for 2016 and $3,025-$3,625 million for 2017. The company also provided projection for 2015 capital and investment expenditures at $1,300-$1,600 million.

Williams Companies continues to guide third quarter dividend at 64 cents per share. The company still projects 2015 and 2016 dividend of $2.47 and $2.85 per share, respectively. Moreover, for 2016 through 2020, the company reaffirmed its dividend hike expectation of 10−15%.

Zacks Rank & Other Stock Picks

Williams Companies currently carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, some better-ranked players in the energy sector are Western Gas Equity Partners, LP WGP , Tallgrass Energy Partners LP TEP and Vanguard Natural Resources LLC VNR . All these stocks sport a Zacks Rank #1 (Strong Buy).

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WILLIAMS COS (WMB): Free Stock Analysis Report

VANGUARD NATURL (VNR): Free Stock Analysis Report

WESTERN GAS EP (WGP): Free Stock Analysis Report

TALLGRASS ENRGY (TEP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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