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8-K - 8-K - WILLIAMS COMPANIES, INC.wmb201912318ker.htm
Exhibit 99.1

News Release
Williams (NYSE: WMB)
One Williams Center
Tulsa, OK 74172
800-Williams
www.williams.com
  wmb_image1a14.jpg
 
 

DATE: Feb. 19, 2020
MEDIA CONTACT:
INVESTOR CONTACTS:
 
 
media@williams.com
(800) 945-8723
Brett Krieg
(918) 573-4614
Grace Scott
(918) 573-1092
 

Williams Reports Fourth-Quarter and Full-Year 2019 Financial Results

TULSA, Okla. – Williams (NYSE: WMB) today announced its unaudited financial results for the three and 12 months ended Dec. 31, 2019.

Full-year 2019 Results Reflect Year-Over-Year Growth Compared with 2018
Net income from continuing operations attributable to Williams available to common stockholders of $862 million – up $1.0 billion over 2018
Net income from continuing operations per share is $0.71 vs. net loss of $0.16 for 2018
Adjusted income per share is $0.99 – up 25% over 2018
Cash flow from operations of $3.69 billion – up 12% over 2018
Adjusted EBITDA of $5.02 billion, up $377 million or 8% over 2018
DCF of $3.30 billion – up $425 million or 15% over 2018

Solid Execution Delivers Strong 4Q 2019 Results
Net income from continuing operations attributable to Williams available to common stockholders of $138 million – up $710 million over 4Q '18
Net income per share of $0.11 vs. net loss of $0.47 per share in 4Q '18
Adjusted income per share of $0.24 – up 26% over 4Q '18
Cash flow from operations of $991 million – up $29 million or 3% over 4Q '18
Adjusted EBITDA of $1.284 billion – up $87 million or 7% over 4Q '18
Distributable Cash Flow ("DCF") of $828 million – up $80 million or 11% over 4Q '18
Dividend coverage ratio is 1.80x
Debt (Net of Cash) to adjusted EBITDA at quarter end: 4.39x

Impressive Business Performance With Records Set for Adjusted EBITDA, Gathering Volumes and Transportation Capacity
Record 2019 adjusted EBITDA driven by strong growth in Atlantic-Gulf and Northeast G&P
Record 4Q gathered volumes of 13.3 Bcf/d, up 10% over 4Q 2018; YTD record 12.9 Bcf/d, up 5% over 2018
Record 4Q '19 firm reserved transportation capacity of ~21.8 Bcf/d, up 8% over 4Q '18, driven by expansion projects including the Gateway and Rivervale South to Market expansions in the Northeast and the North Seattle Lateral expansion in the Northwest

CEO Perspective
Alan Armstrong, president and chief executive officer, made the following comments:

“Williams achieved yet another year of record results in 2019, once again delivering impressive year-over-year growth and exceeding guidance midpoints in our key financial metrics while dramatically reducing capital

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expenditures. These results were underpinned by our strong operations – we set records for both gathered volumes and firm reserved transportation capacity, and our safety metrics continue to improve. We also generated cash in excess of dividends and capital expenditures, reflecting the combined impact of strong business performance, capital discipline and our ongoing portfolio optimization efforts. These results are driving improvement in our credit metrics. Looking ahead to 2020, our disciplined approach to capital allocation should allow us to fully fund our increased dividend and capital expenditures with internally generated cash flows.
"Williams remains extremely well-positioned to capture long-term sustainable growth with our natural gas focused strategy. We continue to see demand for new transport capacity along our premier interstate transmission systems, and the scale and location of our deepwater Gulf of Mexico assets provide a strong competitive advantage to capture emerging growth opportunities. Our resilient G&P business can not only withstand current market pressures, but is also well-positioned to generate long-term value as demand for natural gas continues to grow.”
Armstrong added, “Natural gas has been – and will continue to be – a cornerstone of our nation’s prosperity in the 21st century and a critical part of our clean energy future. Abundant, low cost and reliable natural gas has driven significant reductions in U.S. CO2 emissions, lowered consumers’ utility bills and paved the way for investment in renewables. As the American energy leader that safely handles 30% of the nation’s natural gas, Williams’ large-scale infrastructure is ready to meet continued demand growth, both in the U.S. and abroad.”
Williams Summary Financial Information
4Q
 
YTD
Amounts in millions, except ratios and per-share amounts. Per share amounts are reported on a diluted basis. Net income (loss) amounts are from continuing operations attributable to The Williams Companies, Inc. available to common stockholders.
2019
2018
 
2019
2018
 
 
 
 
 
 
GAAP Measures
 
 
 
 
 
Net Income

$138


($572
)
 

$862


($156
)
Net Income Per Share

$0.11


($0.47
)
 

$0.71


($0.16
)
Cash Flow From Operations

$991


$962

 

$3,693


$3,293

 
 
 
 
 
 
Non-GAAP Measures (1)
 
 
 
 
 
Adjusted EBITDA

$1,284


$1,197

 

$5,015


$4,638

Adjusted Income

$293


$230

 

$1,200


$775

Adjusted Income Per Share

$0.24


$0.19

 

$0.99


$0.79

Distributable Cash Flow

$828


$748

 

$3,297


$2,872

Dividend Coverage Ratio
1.80
x
1.82
x
 
1.79
x
1.69
x
 
 
 
 
 
 
Other
 
 
 
 
 
Debt-to-Adjusted EBITDA at Quarter End (2)
4.39
x
4.80
x
 
 
 
Capital Investments (3)(4)

$408


$868

 

$2,476


$4,153

 
(1) Schedules reconciling adjusted income from continuing operations, adjusted EBITDA, Distributable Cash Flow and Coverage Ratio (non-GAAP measures) to the most comparable GAAP measure are available at www.williams.com and as an attachment to this news release.
(2) Debt-to-Adjusted EBITDA ratio does not represent leverage ratios measured for WMB credit agreement compliance or leverage ratios as calculated by the major credit ratings agencies. Debt is net of cash on hand, and Adjusted EBITDA reflects the sum of the last four quarters.
(3) Capital Investments includes increases to property, plant, and equipment, purchases of businesses, net of cash acquired, and purchases of and contributions to equity-method investments.
(4) YTD 2019 excludes $728 million (net of cash acquired) for the purchase of the remaining 38% of UEO as this amount was provided for at the close of the new Northeast JV by our JV partners, CPPIB, in June 2019.

GAAP Measures

Fourth-quarter 2019 net income benefited from $69 million of increased service revenues driven by Transco expansion projects, the consolidation of UEOM revenues beginning in March 2019, and growth in Northeast G&P volumes. These improvements were partially offset by lower revenues from our Barnett Shale operations primarily associated with reduced recognition of non-cash deferred revenue and the end of a contractual minimum volume commitment (MVC) period.

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Fourth-quarter 2019 also benefited from $1.7 billion lower net asset impairments, partially offset by $692 million due to the absence of 4Q '18 gains on asset sales and $141 million associated with the absence of 4Q '18 gains from the deconsolidation of certain businesses.
Full-year 2019 net income benefited from $431 million of increased service revenues primarily due to the same drivers affecting 4Q '19, partially offset by the absence of revenues from operations sold or deconsolidated during 2018, as well as a $138 million decline in commodity margins.
The full year also benefited from $1.7 billion lower net asset impairments, partially offset by the absence of $692 million in gains on asset sales in 4Q '18 as well as $203 million associated with gains from the deconsolidation of certain businesses in 2018.
Full-year 2019 net income also reflects lower income attributable to non-controlling interests due to the WPZ merger in 2018 and an increased provision for income taxes in 2019 driven by higher pre-tax income.
The increase in cash flow from operations for fourth-quarter and full-year 2019 periods were largely driven by the increased service revenues as previously described and the collection of Transco's filed rates, some of which is subject to refund. The YTD 2019 period also benefited from the receipt of an income tax refund.


Non-GAAP Measures

The increase in adjusted EBITDA for 4Q 2019 and full-year 2019 largely reflects the previously mentioned increased Transco and Northeast G&P service revenues and the benefit of Transco's recently settled general rate case. Lower commodity margins partially offset the higher service revenues in full-year 2019.
Adjusted income for both the quarter and full-year periods also improved, driven by the higher adjusted EBITDA. The full-year period variance also reflects less income attributable to noncontrolling interests driven by the WPZ merger, partially offset by higher interest expense associated with financing obligations for leased pipeline capacity and an increased provision for income taxes.
Fourth-quarter and full-year 2019 DCF are higher, reflecting the increased adjusted EBITDA and lower maintenance capital, partially offset by higher net interest expense. The full-year increase also benefited from an income tax refund received in 2019.

Business Segment Results & Form 10-K

Williams' operations are comprised of the following reportable segments: Atlantic-Gulf, West, Northeast G&P and Other. For additional information, please see the company's 2019 Form 10-K, which Williams expects to file next week with the Securities and Exchange Commission (SEC). Once filed, the document will be on the SEC and Williams websites.
 
Quarter-To-Date
 
Year-To-Date
Amounts in millions
Modified EBITDA
 
Adjusted EBITDA
 
Modified EBITDA
 
Adjusted EBITDA
4Q 2019
4Q 2018
Change
 
4Q 2019
4Q 2018
Change
 
2019
2018
Change
 
2019
2018
Change
Atlantic-Gulf

$212


$605


($393
)
 

$570


$529


$41

 

$1,895


$2,023


($128
)
 

$2,300


$1,931


$369

West
311

(906
)
1,217

 
336

358

(22
)
 
1,232

308

924

 
1,351

1,577

(226
)
Northeast G&P
367

300

67

 
377

304

73

 
1,314

1,086

228

 
1,341

1,090

251

Other
5

20

(15
)
 
1

6

(5
)
 
6

(29
)
35

 
23

40

(17
)
Totals

$895


$19


$876

 

$1,284


$1,197


$87

 

$4,447


$3,388


$1,059

 

$5,015


$4,638


$377

 
Note: Williams uses Modified EBITDA for its segment reporting. Definitions of Modified EBITDA and Adjusted EBITDA and schedules reconciling to net income are included in this news release.
Atlantic-Gulf

Fourth-quarter and full-year 2019 modified and adjusted EBITDA reflect increased service revenues from Transco expansion projects placed in service and the benefit of Transco’s recently settled general rate case, partially offset by lower revenues from Gulfstar. Projects placed into full-service in 4Q '19 include the Gateway and Rivervale South to Market expansions serving the Northeast.

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Fourth-quarter and full-year 2019 modified EBITDA were negatively impacted by a $354 million impairment of the Constitution Pipeline project, of which Williams' 41% share was $145 million, as well as the absence of an $81 million prior-year gain on the sale of certain Gulf Coast pipeline assets.
Full-year 2019 modified EBITDA was also negatively impacted by lower equity AFUDC due to lower levels of construction activity and severance expenses.
The impairment charges, gains on asset sales and severance expenses reflected in modified EBITDA are excluded from adjusted EBITDA.
The company filed a formal stipulation and agreement for Transco’s rate case with the FERC on December 31. All comments received during the public comment period were in support of the settlement. The company anticipates FERC approval of the settlement in second-quarter 2020.
West

Fourth-quarter and full-year 2019 modified and adjusted EBITDA reflect the absence of revenues from operations either sold or deconsolidated and lower revenues in Barnett Shale and Mid-Con, partially offset by higher revenue in Eagle Ford, Haynesville, the Conway fractionation and storage business and growth in JV EBITDA from Rocky Mountain Midstream. Fourth-quarter 2019 experienced an improvement in commodity margins driven by marketing activities, while full-year 2019 was unfavorably impacted by lower NGL prices.
The lower revenue at Barnett Shale noted above was primarily associated with reduced recognition of non-cash deferred revenue and the end of a contractual MVC period. Lower revenues in Mid-Con noted above were due to lower rates and volumes.
Fourth-quarter and full-year 2019 modified EBITDA were favorably impacted by the absence of the $1.8 billion impairment of certain Barnett Shale gathering assets in 2018, partially offset by the absence of a $591 million gain on the 2018 sale of our Four Corners operations.
The impairment charges and gains on asset sales reflected in modified EBITDA are excluded from adjusted EBITDA.
Fourth-quarter and YTD 2019 results reflect higher gathering volumes in the Eagle Ford, Haynesville, and Rocky Mountain Midstream systems. Eagle Ford gathering volumes increased by 9% versus 4Q '18 and by 10% YTD over 2018. Haynesville gathering volumes increased by 21% versus 4Q '18 and by 12% YTD over 2018. Rocky Mountain Midstream gathering volumes grew dramatically on a percentage basis, achieving an average of approximately 270 MMcf/d in 4Q 2019.

Northeast G&P

Improvement in modified and adjusted EBITDA for 4Q and YTD 2019 was driven by increased service revenues from the Susquehanna Supply Hub, the Utica Shale region, and Ohio Valley, as well as the acquisition of Utica East Ohio Midstream in March 2019. The YTD improvements also reflect higher proportional EBITDA from our Appalachia Midstream investment driven by the Marcellus South system.
The 4Q and YTD 2019 periods reflect increases in gross gathering volumes, including 100% of operated equity-method investments, of 12% and 15%, respectively, over the same reporting periods in 2018.


Williams' Fourth-Quarter 2019 Materials to be Posted Shortly; Q&A Webcast Scheduled for Tomorrow

Williams' fourth-quarter 2019 earnings presentation will be posted at www.williams.com. The company’s fourth-quarter 2019 earnings conference call and webcast with analysts and investors is scheduled for Thursday, Feb. 20, at 9:30 a.m. Eastern Time (8:30 a.m. Central Time). A limited number of phone lines will be available at (800) 353-6461. International callers should dial (334) 323-0501. The conference ID is 8801169. A webcast link to the conference call is available at www.williams.com. A replay of the webcast will be available on the website for at least 90 days following the event.

About Williams

Williams (NYSE: WMB) is committed to being the leader in providing infrastructure that safely delivers natural gas products to reliably fuel the clean energy economy. Headquartered in Tulsa, Oklahoma, Williams is an industry-leading, investment grade C-Corp with operations across the natural gas value chain including gathering, processing, interstate transportation and storage of natural gas and natural gas liquids. With major positions in top

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U.S. supply basins, Williams connects the best supplies with the growing demand for clean energy. Williams owns and operates more than 30,000 miles of pipelines system wide – including Transco, the nation’s largest volume and fastest growing pipeline – and handles approximately 30 percent of the natural gas in the United States that is used every day for clean-power generation, heating and industrial use.
www.williams.com

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The Williams Companies, Inc.
Consolidated Statement of Operations
 
 
Year Ended December 31,
 
 
2019
 
2018
 
2017
 
(Millions, except per-share amounts)
Revenues:
 
 
 
 
 
 
Service revenues
 
$
5,933

 
$
5,502

 
$
5,312

Service revenues – commodity consideration
 
203

 
400

 

Product sales
 
2,065

 
2,784

 
2,719

Total revenues
 
8,201

 
8,686

 
8,031

Costs and expenses:
 
 
 
 
 
 
Product costs
 
1,961

 
2,707

 
2,300

Processing commodity expenses
 
105

 
137

 

Operating and maintenance expenses
 
1,468

 
1,507

 
1,576

Depreciation and amortization expenses
 
1,714

 
1,725

 
1,736

Selling, general, and administrative expenses
 
558

 
569

 
594

Impairment of certain assets
 
464

 
1,915

 
1,248

Gain on sale of certain assets and businesses
 
2

 
(692
)
 
(1,095
)
Regulatory charges resulting from Tax Reform
 

 
(17
)
 
674

Other (income) expense – net
 
8

 
67

 
71

Total costs and expenses
 
6,280

 
7,918

 
7,104

Operating income (loss)
 
1,921

 
768

 
927

Equity earnings (losses)
 
375

 
396

 
434

Other investing income (loss) – net
 
(79
)
 
187

 
282

Interest incurred
 
(1,218
)
 
(1,160
)
 
(1,116
)
Interest capitalized
 
32

 
48

 
33

Other income (expense) – net
 
33

 
92

 
(25
)
Income (loss) from continuing operations before income taxes
 
1,064

 
331

 
535

Provision (benefit) for income taxes
 
335

 
138

 
(1,974
)
Income (loss) from continuing operations
 
729

 
193

 
2,509

Income (loss) from discontinued operations
 
(15
)
 

 

Net income (loss)
 
714

 
193

 
2,509

Less: Net income (loss) attributable to noncontrolling interests
 
(136
)
 
348

 
335

Net income (loss) attributable to The Williams Companies, Inc.
 
850

 
(155
)
 
2,174

Preferred stock dividends
 
3

 
1

 

Net income (loss) available to common stockholders
 
$
847

 
$
(156
)
 
$
2,174

Amounts attributable to The Williams Companies, Inc. available to common stockholders:
 
 
 
 
 
 
Income (loss) from continuing operations
 
$
862

 
$
(156
)
 
$
2,174

Income (loss) from discontinued operations
 
(15
)
 

 

Net income (loss)
 
$
847

 
$
(156
)
 
$
2,174

Basic earnings (loss) per common share:
 
 
 
 
 
 
Income (loss) from continuing operations
 
$
.71

 
$
(.16
)
 
$
2.63

Income (loss) from discontinued operations
 
(.01
)
 

 

Net income (loss)
 
$
.70

 
$
(.16
)
 
$
2.63

Weighted-average shares (thousands)
 
1,212,037

 
973,626

 
826,177

Diluted earnings (loss) per common share:
 
 
 
 
 
 
Income (loss) from continuing operations
 
$
.71

 
$
(.16
)
 
$
2.62

Income (loss) from discontinued operations
 
(.01
)
 

 

Net income (loss)
 
$
.70

 
$
(.16
)
 
$
2.62

Weighted-average shares (thousands)
 
1,214,011

 
973,626

 
828,518



6


The Williams Companies, Inc.
Consolidated Balance Sheet
 
 
December 31,
 
 
2019
 
2018
 
 
(Millions, except per-share amounts)
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
289

 
$
168

Trade accounts and other receivables (net of allowance of $6 at December 31, 2019 and $9 at December 31, 2018)
 
996

 
992

Inventories
 
125

 
130

Other current assets and deferred charges
 
170

 
174

Total current assets
 
1,580

 
1,464

 
 
 
 
 
Investments
 
6,235

 
7,821

Property, plant, and equipment – net
 
29,200

 
27,504

Intangible assets – net of accumulated amortization
 
7,959

 
7,767

Regulatory assets, deferred charges, and other
 
1,066

 
746

Total assets
 
$
46,040

 
$
45,302

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
552

 
$
662

Accrued liabilities
 
1,276

 
1,102

Long-term debt due within one year
 
2,140

 
47

Total current liabilities
 
3,968

 
1,811

 
 
 
 
 
Long-term debt
 
20,148

 
22,367

Deferred income tax liabilities
 
1,782

 
1,524

Regulatory liabilities, deferred income, and other
 
3,778

 
3,603

Contingent liabilities and commitments
 
 
 
 
 
 
 
 
 
Equity:
 
 
 
 
Stockholders’ equity:
 
 
 
 
Preferred stock
 
35

 
35

Common stock ($1 par value; 1,470 million shares authorized at December 31, 2019 and December 31, 2018; 1,247 million shares issued at December 31, 2019 and 1,245 million shares issued at December 31, 2018)
 
1,247

 
1,245

Capital in excess of par value
 
24,323

 
24,693

Retained deficit
 
(11,002
)
 
(10,002
)
Accumulated other comprehensive income (loss)
 
(199
)
 
(270
)
Treasury stock, at cost (35 million shares of common stock)
 
(1,041
)
 
(1,041
)
Total stockholders’ equity
 
13,363

 
14,660

Noncontrolling interests in consolidated subsidiaries
 
3,001

 
1,337

Total equity
 
16,364

 
15,997

Total liabilities and equity
 
$
46,040

 
$
45,302



7


The Williams Companies, Inc.
Consolidated Statement of Cash Flows
 
 
Year Ended December 31,
 
 
2019
 
2018
 
2017
 
 
(Millions)
OPERATING ACTIVITIES:
 
 
 
 
 
 
Net income (loss)
 
$
714

 
$
193

 
$
2,509

Adjustments to reconcile to net cash provided (used) by operating activities:
 
 
 
 
 
 
Depreciation and amortization
 
1,714

 
1,725

 
1,736

Provision (benefit) for deferred income taxes
 
376

 
220

 
(2,012
)
Equity (earnings) losses
 
(375
)
 
(396
)
 
(434
)
Distributions from unconsolidated affiliates
 
657

 
693

 
784

Gain on disposition of equity-method investments
 
(122
)
 

 
(269
)
Impairment of equity-method investments
 
186

 
32

 

(Gain) on sale of certain assets and businesses
 
2

 
(692
)
 
(1,095
)
Impairment of certain assets
 
464

 
1,915

 
1,249

(Gain) loss on deconsolidation of businesses
 
29

 
(203
)
 

Amortization of stock-based awards
 
57

 
55

 
78

Regulatory charges resulting from Tax Reform
 

 
(15
)
 
776

Cash provided (used) by changes in current assets and liabilities:
 
 
 
 
 
 
Accounts and notes receivable
 
34

 
(36
)
 
(88
)
Inventories
 
5

 
(16
)
 
8

Other current assets and deferred charges
 
21

 
17

 
(21
)
Accounts payable
 
(46
)
 
(93
)
 
118

Accrued liabilities
 
153

 
23

 
(92
)
Other, including changes in noncurrent assets and liabilities
 
(176
)
 
(129
)
 
(158
)
Net cash provided (used) by operating activities
 
3,693

 
3,293

 
3,089

FINANCING ACTIVITIES:
 
 
 
 
 
 
Proceeds from (payments of) commercial paper – net
 
(4
)
 
(2
)
 
(93
)
Proceeds from long-term debt
 
767

 
3,926

 
3,333

Payments of long-term debt
 
(909
)
 
(3,204
)
 
(5,925
)
Proceeds from issuance of common stock
 
10

 
15

 
2,131

Proceeds from sale of partial interest in consolidated subsidiary
 
1,334

 

 

Common dividends paid
 
(1,842
)
 
(1,386
)
 
(992
)
Dividends and distributions paid to noncontrolling interests
 
(124
)
 
(591
)
 
(822
)
Contributions from noncontrolling interests
 
36

 
15

 
17

Payments for debt issuance costs
 

 
(26
)
 
(17
)
Other – net
 
(13
)
 
(46
)
 
(92
)
Net cash provided (used) by financing activities
 
(745
)
 
(1,299
)
 
(2,460
)
INVESTING ACTIVITIES:
 
 
 
 
 
 
Property, plant, and equipment:
 
 
 
 
 
 
Capital expenditures (1)
 
(2,109
)
 
(3,256
)
 
(2,399
)
Dispositions – net
 
(40
)
 
(7
)
 
(41
)
Contributions in aid of construction
 
52

 
411

 
426

Proceeds from sale of businesses, net of cash divested
 
(2
)
 
1,296

 
2,067

Purchases of businesses, net of cash acquired
 
(728
)
 

 

Proceeds from dispositions of equity-method investments
 
485

 

 
200

Purchases of and contributions to equity-method investments
 
(453
)
 
(1,132
)
 
(132
)
Other – net
 
(32
)
 
(37
)
 
(21
)
Net cash provided (used) by investing activities
 
(2,827
)
 
(2,725
)
 
100

Increase (decrease) in cash and cash equivalents
 
121

 
(731
)
 
729

Cash and cash equivalents at beginning of year
 
168

 
899

 
170

Cash and cash equivalents at end of year
 
$
289

 
$
168

 
$
899

_________
 
 
 
 
 
 
(1) Increases to property, plant, and equipment
 
$
(2,023
)
 
$
(3,021
)
 
$
(2,662
)
Changes in related accounts payable and accrued liabilities
 
(86
)
 
(235
)
 
263

Capital expenditures
 
$
(2,109
)
 
$
(3,256
)
 
$
(2,399
)


8


Atlantic-Gulf
 
(UNAUDITED)
 
 
2018
 
2019
 
(Dollars in millions)
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Year
 
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
 Year
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Service revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Nonregulated gathering & processing fee-based revenue
$
138

$
128

$
138

$
137

$
541

 
$
128

$
119

$
117

$
113

$
477

 
Regulated transportation revenue
413

406

411

508

1,738

 
517

514

549

548

2,128

 
Other fee revenues
32

34

34

34

134

 
34

40

32

34

140

 
Tracked service revenue
26

22

24

24

96

 
30

25

33

28

116

 
Nonregulated commodity consideration
15

12

18

14

59

 
13

13

7

8

41

 
Product sales:
 
 
 
 
 
 
 
 
 
 
 
 
NGL sales from gas processing
15

10

16

15

56

 
12

12

6

9

39

 
Marketing sales
45

57

67

53

222

 
40

32

23

34

129

 
Other sales
1

1

1


3

 
2

1

1

1

5

 
Tracked product sales
32

37

47

38

154

 
28

23

46

18

115

 
Total revenues
717

707

756

823

3,003

 
804

779

814

793

3,190

 
Segment costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
NGL cost of goods sold
15

12

19

14

60

 
13

14

6

8

41

 
Marketing cost of goods sold
44

56

67

53

220

 
41

28

23

34

126

 
Other cost of goods sold





 

2


1

3

 
Tracked cost of goods sold
33

38

48

39

158

 
28

25

46

19

118

 
Processing commodity expenses
5

2

3

6

16

 
5

5

2

4

16

 
Operating and administrative costs
177

181

181

197

736

 
168

198

176

208

750

 
Tracked operating and administrative costs
26

22

24

23

95

 
30

25

32

29

116

 
Other segment costs and expenses
(2
)
(15
)
(29
)
14

(32
)
 
1

2

(26
)
(29
)
(52
)
 
Impairment of certain assets (1)





 



354

354

 
Gain on sale of certain assets and businesses



(81
)
(81
)
 





 
Regulatory charges resulting from Tax Reform
11

(20
)


(9
)
 





 
Total segment costs and expenses
309

276

313

265

1,163

 
286

299

259

628

1,472

 
Proportional Modified EBITDA of equity-method investments
43

44

49

47

183

 
42

44

44

47

177

 
Modified EBITDA
451

475

492

605

2,023

 
560

524

599

212

1,895

 
Adjustments
15

(19
)
(12
)
(76
)
(92
)
 

35

12

358

405

 
Adjusted EBITDA
$
466

$
456

$
480

$
529

$
1,931

 
$
560

$
559

$
611

$
570

$
2,300

 
NGL Margin
$
10

$
8

$
12

$
9

$
39

 
$
7

$
6

$
5

$
5

$
23

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statistics for Operated Assets
 
 
 
 
 
 
 
 
 
 
 
 
Gathering, Processing, and Crude Oil Transportation
 
 
 
 
 
 
 
 
 
 
 
 
Gathering volumes (Bcf per day) - Consolidated (2)
0.29

0.23

0.26

0.24

0.26

 
0.25

0.25

0.22

0.29

0.25

 
Gathering volumes (Bcf per day) - Non-consolidated (3)
0.24

0.25

0.25

0.31

0.26

 
0.35

0.38

0.36

0.35

0.36

 
Plant inlet natural gas volumes (Bcf per day) - Consolidated (2)
0.54

0.43

0.51

0.53

0.50

 
0.53

0.55

0.50

0.58

0.54

 
Plant inlet natural gas volumes (Bcf per day) - Non-consolidated (3)
0.24

0.25

0.25

0.32

0.27

 
0.35

0.39

0.36

0.35

0.36

 
Crude transportation volumes (Mbbls/d)
142

132

147

140

140

 
146

136

128

135

136

 
Consolidated (2)
 
 
 
 
 
 
 
 
 
 
 
 
Ethane margin ($/gallon)
$
.03

$
.16

$
.24

$
.14

$
.14

 
$
.10

$
.02

$
.01

$
.01

$
.04

 
Non-ethane margin ($/gallon)
$
.66

$
.74

$
.76

$
.58

$
.68

 
$
.48

$
.28

$
.35

$
.37

$
.36

 
NGL margin ($/gallon)
$
.40

$
.48

$
.51

$
.36

$
.43

 
$
.26

$
.17

$
.22

$
.24

$
.22

 
Ethane equity sales (Mbbls/d)
2.82

1.91

3.05

2.98

2.69

 
4.16

4.11

1.85

1.97

3.01

 
Non-ethane equity sales (Mbbls/d)
3.87

2.35

3.14

3.21

3.14

 
3.28

5.34

3.15

3.57

3.84

 
NGL equity sales (Mbbls/d)
6.69

4.26

6.19

6.19

5.83

 
7.44

9.45

5.00

5.54

6.85

 
Ethane production (Mbbls/d)
12

12

15

16

14

 
17

14

9

10

13

 
Non-ethane production (Mbbls/d)
19

17

18

19

18

 
19

19

18

21

19

 
NGL production (Mbbls/d)
31

29

33

35

32

 
36

33

27

31

32

 
Non-consolidated (3)
 
 
 
 
 
 
 
 
 
 
 
 
NGL equity sales (Mbbls/d)
3

5

4

5

4

 
7

8

6

5

6

 
NGL production (Mbbls/d)
18

20

20

23

20

 
24

27

24

26

25

 
Transcontinental Gas Pipe Line
 
 
 
 
 
 
 
 
 
 
 
 
Throughput (Tbtu)
1,099.9

965.5

1,092.3

1,150.9

4,308.5

 
1,183.9

1,109.4

1,216.2

1,227.6

4,737.2

 
Avg. daily transportation volumes (Tbtu)
12.2

10.6

11.9

12.5

11.8

 
13.2

12.2

13.2

13.3

13.0

 
Avg. daily firm reserved capacity (Tbtu)
15.4

15.0

15.0

16.4

15.5

 
17.1

17.0

17.3

17.5

17.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Our partners' $209 million share of the fourth-quarter 2019 impairment of the Constitution pipeline project is reflected outside of Modified EBITDA within Net loss attributable to noncontrolling interests.
 
(2) Excludes volumes associated with equity-method investments that are not consolidated in our results.
 
(3) Includes 100% of the volumes associated with operated equity-method investments.
 

9


Northeast G&P
 
(UNAUDITED)
 
 
2018
 
2019
 
(Dollars in millions)
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
 Year
 
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
 Year
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Service revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Nonregulated gathering and processing fee-based revenue
$
189

$
196

$
211

$
226

$
822

 
$
230

$
267

$
284

$
299

$
1,080

 
Other fee revenues
39

36

36

43

154

 
46

63

69

80

258

 
Nonregulated commodity consideration
4

4

6

6

20

 
5

3

1

3

12

 
Product sales:
 
 
 
 
 
 
 
 
 
 
 
 
NGL sales from gas processing
4

5

6

5

20

 
5

3


3

11

 
Marketing sales
89

65

57

35

246

 
37

28

26

30

121

 
Tracked product sales
5

5

6

5

21

 
5

6

4

3

18

 
Total revenues
330

311

322

320

1,283

 
328

370

384

418

1,500

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
NGL cost of goods sold
4

5

6

5

20

 
5

3


4

12

 
Marketing cost of goods sold
90

65

57

36

248

 
37

29

26

30

122

 
Tracked cost of goods sold
5

7

6

3

21

 
5

6

3

4

18

 
Processing commodity expenses
2

2

3

2

9

 
3

2

1

2

8

 
Operating and administrative costs
85

91

96

108

380

 
97

130

120

122

469

 
Other segment costs and expenses
2

1

4

5

12

 
4


(3
)

1

 
Impairment of certain assets





 



10

10

 
Total segment costs and expenses
188

171

172

159

690

 
151

170

147

172

640

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proportional Modified EBITDA of equity-method investments
108

115

131

139

493

 
122

103

108

121

454

 
Modified EBITDA
250

255

281

300

1,086

 
299

303

345

367

1,314

 
Adjustments



4

4

 
3

16

(2
)
10

27

 
Adjusted EBITDA
$
250

$
255

$
281

$
304

$
1,090

 
$
302

$
319

$
343

$
377

$
1,341

 
NGL margin
$
2

$
2

$
3

$
4

$
11

 
$
2

$
1

$

$

$
3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statistics for Operated Assets
 
 
 
 
 
 
 
 
 
 
 
 
Gathering and Processing
 
 
 
 
 
 
 
 
 
 
 
 
Gathering volumes (Bcf per day) - Consolidated (1)
3.38

3.45

3.67

4.02

3.63

 
4.05

4.16

4.33

4.41

4.24

 
Gathering volumes (Bcf per day) - Non-consolidated (2)
3.82

3.59

3.73

3.89

3.76

 
4.27

4.08

4.35

4.47

4.29

 
Plant inlet natural gas volumes (Bcf per day)
0.49

0.55

0.52

0.52

0.52

 
0.63

1.04

1.16

1.33

1.04

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ethane equity sales (Mbbls/d)
1.33

3.17

2.74

2.80

2.52

 
2.73

1.83

1.94

1.05

1.89

 
Non-ethane equity sales (Mbbls/d)
0.79

1.09

1.49

1.28

1.16

 
1.21

1.09

0.67

0.83

0.96

 
NGL equity sales (Mbbls/d)
2.12

4.26

4.23

4.08

3.68

 
3.94

2.92

2.61

1.88

2.85

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ethane production (Mbbls/d)
23

27

26

20

24

 
22

24

29

37

28

 
Non-ethane production (Mbbls/d)
21

21

23

22

22

 
22

34

63

69

48

 
NGL production (Mbbls/d)
44

48

49

42

46

 
44

58

92

106

76

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Includes gathering volumes associated with Susquehanna Supply Hub, the Northeast JV, and Utica Supply Hub, all of which are consolidated.
 
(2) Includes 100% of the volumes associated with operated equity-method investments, including the Laurel Mountain Midstream partnership; and the Bradford Supply Hub and a portion of the Marcellus South Supply Hub within the Appalachia Midstream Services partnership. Volumes handled by Blue Racer Midstream (gathering and processing), which we do not operate, are not included.
 


10


West
 
(UNAUDITED)
 
 
2018
 
2019
 
(Dollars in millions)
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Year 
 
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
 Year
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Service revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Nonregulated gathering & processing fee-based revenue
$
386

$
398

$
387

$
335

$
1,506

 
$
319

$
331

$
282

$
276

$
1,208

 
Regulated transportation revenue
109

104

106

110

429

 
110

104

107

111

432

 
Other fee revenues
36

32

40

41

149

 
44

42

44

41

171

 
Tracked service revenues

1



1

 

1


1

2

 
Nonregulated commodity consideration
82

78

97

64

321

 
46

40

30

34

150

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Product sales:
 
 
 
 
 
 
 
 
 
 
 
 
NGL sales from gas processing
85

76

90

71

322

 
48

41

31

34

154

 
Marketing sales
415

462

613

569

2,059

 
422

385

352

453

1,612

 
Other sales
14

12

18

5

49

 
5

5

2

2

14

 
Tracked product sales
16

10

11

(19
)
18

 
4

3

4

6

17

 
Total revenues
1,143

1,173

1,362

1,176

4,854

 
998

952

852

958

3,760

 
Segment costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
NGL cost of goods sold
85

81

101

66

333

 
49

41

32

36

158

 
Marketing cost of goods sold
415

459

603

585

2,062

 
419

388

345

437

1,589

 
Other cost of goods sold
10

7

14

4

35

 
4

4


2

10

 
Tracked cost of goods sold
16

10

12

(20
)
18

 
3

4

5

5

17

 
Processing commodity expenses
30

20

26

40

116

 
31

19

13

16

79

 
Operating and administrative costs
193

215

200

166

774

 
166

180

166

159

671

 
Tracked operating and administrative costs

1



1

 

1



1

 
Other segment costs and expenses
6

10

19

15

50

 
6

1

9


16

 
Impairment of certain assets



1,849

1,849

 
12

64


24

100

 
Gain on sale of certain assets and businesses



(591
)
(591
)
 
2




2

 
Regulatory charges resulting from Tax Reform
(7
)



(7
)
 





 
Total segment costs and expenses
748

803

975

2,114

4,640

 
692

702

570

679

2,643

 
Proportional Modified EBITDA of equity-method investments
18

19

25

32

94

 
26

28

29

32

115

 
Modified EBITDA
413

389

412

(906
)
308

 
332

278

311

311

1,232

 
Adjustments
(7
)

12

1,264

1,269

 
14

78

2

25

119

 
Adjusted EBITDA
$
406

$
389

$
424

$
358

$
1,577

 
$
346

$
356

$
313

$
336

$
1,351

 
NGL margin
$
52

$
53

$
60

$
29

$
194

 
$
14

$
21

$
16

$
16

$
67

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statistics for Operated Assets
 
 
 
 
 
 
 
 
 
 
 
 
Gathering and Processing
 
 
 
 
 
 
 
 
 
 
 
 
Gathering volumes (Bcf per day) - Consolidated (1)
4.58

4.60

4.48

3.44

4.27

 
3.42

3.53

3.61

3.51

3.52

 
Gathering volumes (Bcf per day) - Non-consolidated (2)


0.15

0.16

0.08

 
0.17

0.15

0.21

0.27

0.20

 
Plant inlet natural gas volumes (Bcf per day) - Consolidated (1)
2.16

2.12

2.11

1.65

2.01

 
1.41

1.52

1.56

1.44

1.48

 
Plant inlet natural gas volumes (Bcf per day) - Non-consolidated (2)


0.14

0.17

0.08

 
0.17

0.14

0.21

0.26

0.08

 
Ethane equity sales (Mbbls/d)
19.01

10.23

12.19

16.40

14.44

 
14.63

14.59

3.32

5.17

9.38

 
Non-ethane equity sales (Mbbls/d)
19.83

18.80

19.48

14.40

18.12

 
12.59

13.54

14.02

11.95

13.03

 
NGL equity sales (Mbbls/d)
38.84

29.03

31.67

30.80

32.56

 
27.22

28.13

17.34

17.12

22.41

 
Ethane margin ($/gallon)
$
.01

$
.07

$
.18

$
.02

$
.06

 
$
(.03
)
$
(.03
)
$
(.06
)
$
(.10
)
$
(.04
)
 
Non-ethane margin ($/gallon)
$
.69

$
.71

$
.69

$
.49

$
.65

 
$
.34

$
.42

$
.32

$
.37

$
.36

 
NGL margin ($/gallon)
$
.35

$
.48

$
.49

$
.24

$
.39

 
$
.14

$
.19

$
.25

$
.23

$
.19

 
Ethane production (Mbbls/d) - Consolidated (1)
31

26

28

29

28

 
29

22

9

11

18

 
Ethane production (Mbbls/d) - Non-consolidated (2)



1


 
1


2

3

1

 
Non-ethane production (Mbbls/d) - Consolidated (1)
62

61

59

41

55

 
33

37

39

35

36

 
Non-ethane production (Mbbls/d) - Non-consolidated (2)


5

5

3

 
6

1

16

19

11

 
NGL production (Mbbls/d)
93

87

92

76

86

 
69

60

66

68

66

 
NGL and Crude Transportation volumes (Mbbls) (3)
21,263

21,334

22,105

23,049

87,751

 
22,848

24,465

22,972

21,910

92,195

 
Northwest Pipeline LLC
 
 
 
 
 
 
 
 
 
 
 
 
Throughput (Tbtu)
226.1

188.1

193.5

212.3

820.0

 
243.5

184.6

179.2

248.8

856.1

 
Avg. daily transportation volumes (Tbtu)
2.5

2.1

2.1

2.3

2.2

 
2.7

2.0

1.9

2.7

2.3

 
Avg. daily firm reserved capacity (Tbtu)
3.1

3.1

3.1

3.1

3.1

 
3.1

3.0

3.0

3.0

3.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Excludes volumes associated with equity-method investments that are not consolidated in our results.
 
(2) Includes 100% of the volumes associated with operated equity-method investments, including the Jackalope Gas Gathering System and Rocky Mountain Midstream.
 
(3) Includes 100% of the volumes associated with operated equity-method investments, including the Overland Pass Pipeline Company and Rocky Mountain Midstream.
 

11


Capital Expenditures and Investments
 
(UNAUDITED)
 
 
2018
 
2019
 
(Dollars in millions)
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Year
 
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
 Year
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures:
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic-Gulf
$
764

$
746

$
549

$
359

$
2,418

 
$
193

$
234

$
497

$
202

$
1,126

 
Northeast G&P
114

104

114

139

471

 
152

177

131

74

534

 
West
69

74

96

93

332

 
69

80

153

126

428

 
Other
10

9

10

6

35

 
8

6

5

2

21

 
Total (1)
$
957

$
933

$
769

$
597

$
3,256

 
$
422

$
497

$
786

$
404

$
2,109

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchases of investments:
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic-Gulf
$
1

$

$
5

$

$
6

 
$

$
12

$
3

$
1

$
16

 
Northeast G&P
20

70

114

58

262

 
47

61

34

63

205

 
West


593

271

864

 
52

70

82

28

232

 
Total
$
21

$
70

$
712

$
329

$
1,132

 
$
99

$
143

$
119

$
92

$
453

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Summary:
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic-Gulf
$
765

$
746

$
554

$
359

$
2,424

 
$
193

$
246

$
500

$
203

$
1,142

 
Northeast G&P
134

174

228

197

733

 
199

238

165

137

739

 
West
69

74

689

364

1,196

 
121

150

235

154

660

 
Other
10

9

10

6

35

 
8

6

5

2

21

 
Total
$
978

$
1,003

$
1,481

$
926

$
4,388

 
$
521

$
640

$
905

$
496

$
2,562

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital investments:
 
 
 
 
 
 
 
 
 
 
 
 
Increases to property, plant, and equipment
$
934

$
930

$
618

$
539

$
3,021

 
$
418

$
559

$
730

$
316

$
2,023

 
Purchases of businesses, net of cash acquired





 
727


1


728

 
Purchases of investments
21

70

712

329

1,132

 
99

143

119

92

453

 
Total
$
955

$
1,000

$
1,330

$
868

$
4,153

 
$
1,244

$
702

$
850

$
408

$
3,204

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Increases to property, plant, and equipment
$
934

$
930

$
618

$
539

$
3,021

 
$
418

$
559

$
730

$
316

$
2,023

 
Changes in related accounts payable and accrued liabilities
23

3

151

58

235

 
4

(62
)
56

88

86

 
Capital expenditures
$
957

$
933

$
769

$
597

$
3,256

 
$
422

$
497

$
786

$
404

$
2,109

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contributions from noncontrolling interests
$
3

$
8

$
2

$
2

$
15

 
$
4

$
28

$

$
4

$
36

 
Contributions in aid of construction
$
190

$
149

$
56

$
16

$
411

 
$
10

$
8

$
7

$
27

$
52

 
Proceeds from sale of businesses, net of cash divested
$

$

$

$
1,296

$
1,296

 
$
(2
)
$

$

$

$
(2
)
 
Proceeds from sale of partial interest in consolidated subsidiary
$

$

$

$

$

 
$

$
1,330

$

$
4

$
1,334

 
Proceeds from disposition of equity-method investments
$

$

$

$

$

 
$

$
485

$

$

$
485

 


12


Non-GAAP Measures
This news release and accompanying materials may include certain financial measures – Adjusted EBITDA, adjusted income (“earnings”), adjusted earnings per share, distributable cash flow and dividend coverage ratio – that are non-GAAP financial measures as defined under the rules of the SEC.

Our segment performance measure, Modified EBITDA, is defined as net income (loss) before income (loss) from discontinued operations, income tax expense, net interest expense, equity earnings from equity-method investments, other net investing income, impairments of equity investments and goodwill, depreciation and amortization expense, and accretion expense associated with asset retirement obligations for nonregulated operations. We also add our proportional ownership share (based on ownership interest) of Modified EBITDA of equity-method investments.

Adjusted EBITDA further excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Management believes this measure provides investors meaningful insight into results from ongoing operations.

Distributable cash flow is defined as Adjusted EBITDA less maintenance capital expenditures, cash portion of net interest expense, income attributable to or dividends/ distributions paid to noncontrolling interests and cash income taxes, and certain other adjustments that management believes affects the comparability of results. Adjustments for maintenance capital expenditures and cash portion of interest expense include our proportionate share of these items of our equity-method investments. We also calculate the ratio of distributable cash flow to the total cash dividends paid (dividend coverage ratio). This measure reflects Williams’ distributable cash flow relative to its actual cash dividends paid.

This news release is accompanied by a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are accepted financial indicators used by investors to compare company performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of assets and the cash that the business is generating.

Neither Adjusted EBITDA, adjusted income, nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income or cash flow from operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.

13


Reconciliation of Income (Loss) from Continuing Operations Attributable to The Williams Companies, Inc. to Adjusted Income
 
(UNAUDITED)
 
 
2018
 
2019
 
(Dollars in millions, except per-share amounts)
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Year
 
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
 Year
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to The Williams Companies, Inc. available to common stockholders
$
152

$
135

$
129

$
(572
)
$
(156
)
 
$
194

$
310

$
220

$
138

$
862

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations - diluted earnings (loss) per common share (1)
$
.18

$
.16

$
.13

$
(.47
)
$
(.16
)
 
$
.16

$
.26

$
.18

$
.11

$
.71

 
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic-Gulf
 
 
 
 
 
 
 
 
 
 
 
 
Constitution Pipeline project development costs
$
2

$
1

$
1

$

$
4

 
$

$
1

$
1

$
1

$
3

 
Impairment of certain assets (2)





 



354

354

 
Settlement charge from pension early payout program



7

7

 





 
Regulatory adjustments resulting from Tax Reform
11

(20
)


(9
)
 





 
Benefit of regulatory asset associated with increase in Transco’s estimated deferred state income tax rate following WPZ Merger


(3
)

(3
)
 





 
Share of regulatory charges resulting from Tax Reform for equity-method investments
2




2

 





 
Reversal of expenditures capitalized in prior years





 

15


1

16

 
Gain on sale of certain Gulf Coast pipeline assets



(81
)
(81
)
 





 
Gain on asset retirement


(10
)
(2
)
(12
)
 





 
Severance and related costs





 

19

11

2

32

 
Total Atlantic-Gulf adjustments
15

(19
)
(12
)
(76
)
(92
)
 

35

12

358

405

 
Northeast G&P
 
 
 
 
 
 
 
 
 
 
 
 
Expenses associated with new venture





 
3

6

1


10

 
Settlement charge from pension early payout program



4

4

 





 
Impairment of certain assets





 



10

10

 
Severance and related costs





 

10

(3
)

7

 
Total Northeast G&P adjustments



4

4

 
3

16

(2
)
10

27

 
West
 
 
 
 
 
 
 
 
 
 
 
 
Impairment of certain assets



1,849

1,849

 
12

64


24

100

 
Settlement charge from pension early payout program



6

6

 





 
Regulatory adjustments resulting from Tax Reform
(7
)



(7
)
 





 
Charge for regulatory liability associated with the decrease in Northwest Pipeline’s estimated deferred state income tax rates following WPZ Merger


12


12

 





 
Gain on sale of Four Corners assets



(591
)
(591
)
 
2




2

 
Severance and related costs





 

14

2

1

17

 
Total West adjustments
(7
)

12

1,264

1,269

 
14

78

2

25

119

 
Other
 
 
 
 
 
 
 
 
 
 
 
 
Loss on early retirement of debt
7




7

 





 
Impairment of certain assets

66



66

 





 
Settlement charge from pension early payout program



5

5

 





 
Regulatory adjustments resulting from Tax Reform

1



1

 





 
(Benefit) adjustment of regulatory assets associated with increase in Transco’s estimated deferred state income tax rate following WPZ Merger


(45
)

(45
)
 
12




12

 
WPZ Merger costs

4

15

1

20

 





 
Gain on sale of certain Gulf Coast pipeline systems



(20
)
(20
)
 





 
Charitable contribution of preferred stock to Williams Foundation


35


35

 





 
Accrual for loss contingencies associated with former operations





 


9

(5
)
4

 
Severance and related costs





 



1

1

 
Total Other adjustments
7

71

5

(14
)
69

 
12


9

(4
)
17

 
Adjustments included in Modified EBITDA
15

52

5

1,178

1,250

 
29

129

21

389

568

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjustments below Modified EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
Gain on deconsolidation of Jackalope interest

(62
)


(62
)
 





 
Gain on deconsolidation of certain Permian assets



(141
)
(141
)
 
2




2

 
Loss on deconsolidation of Constitution





 



27

27

 
Impairment of equity-method investments



32

32

 
74

(2
)
114


186

 
Gain on sale of equity-method investments





 

(122
)


(122
)
 
Allocation of adjustments to noncontrolling interests
(5
)
21



16

 

(1
)

(210
)
(211
)
 
 
(5
)
(41
)

(109
)
(155
)
 
76

(125
)
114

(183
)
(118
)
 
Total adjustments
10

11

5

1,069

1,095

 
105

4

135

206

450

 
Less tax effect for above items
(3
)
(3
)
(1
)
(267
)
(274
)
 
(26
)
(1
)
(34
)
(51
)
(112
)
 
Adjustments for tax-related items (3)


110


110

 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted income from continuing operations available to common stockholders
$
159

$
143

$
243

$
230

$
775

 
$
273

$
313

$
321

$
293

$
1,200

 
Adjusted income from continuing operations - diluted earnings per common share (1)
$
.19

$
.17

$
.24

$
.19

$
.79

 
$
.22

$
.26

$
.26

$
.24

$
.99

 
Weighted-average shares - diluted (thousands)
830,197

830,107

1,026,504

1,212,822

976,097

 
1,213,592

1,214,065

1,214,165

1,214,212

1,214,011

 
(1) The sum of earnings per share for the quarters may not equal the total earnings per share for the year due to changes in the weighted-average number of common shares outstanding.
 
(2) Our partners' $209 million share of the fourth-quarter 2019 impairment of the Constitution pipeline project is reflected below in Allocation of adjustments to noncontrolling interests.
 
(3) The third quarter of 2018 reflects tax adjustments driven by the WPZ Merger, primarily a valuation allowance for foreign tax credits.
 

14


Reconciliation of Distributable Cash Flow (DCF)
 
(UNAUDITED)
 
 
2018
 
2019
 
(Dollars in millions, except coverage ratios)
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Year
 
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
 Year
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Williams Companies, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP "Net Income (Loss)" to Non-GAAP "Modified EBITDA", "Adjusted EBITDA" and "Distributable cash flow"
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$
270

$
269

$
200

$
(546
)
$
193

 
$
214

$
324

$
242

$
(66
)
$
714

 
Provision (benefit) for income taxes
55

52

190

(159
)
138

 
69

98

77

91

335

 
Interest expense
273

275

270

294

1,112

 
296

296

296

298

1,186

 
Equity (earnings) losses
(82
)
(92
)
(105
)
(117
)
(396
)
 
(80
)
(87
)
(93
)
(115
)
(375
)
 
Other investing (income) loss - net
(4
)
(68
)
(2
)
(113
)
(187
)
 
73

(126
)
107

25

79

 
Proportional Modified EBITDA of equity-method investments
169

178

205

218

770

 
190

175

181

200

746

 
Depreciation and amortization expenses
431

434

425

435

1,725

 
416

424

435

439

1,714

 
Accretion for asset retirement obligations associated with nonregulated operations
8

10

8

7

33

 
9

8

8

8

33

 
(Income) loss from discontinued operations, net of tax





 



15

15

 
Modified EBITDA
1,120

1,058

1,191

19

3,388

 
1,187

1,112

1,253

895

4,447

 
EBITDA adjustments
15

52

5

1,178

1,250

 
29

129

21

389

568

 
Adjusted EBITDA
1,135

1,110

1,196

1,197

4,638

 
1,216

1,241

1,274

1,284

5,015

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maintenance capital expenditures (1)
(110
)
(160
)
(138
)
(122
)
(530
)
 
(93
)
(130
)
(128
)
(113
)
(464
)
 
Preferred dividends



(1
)
(1
)
 
(1
)

(1
)
(1
)
(3
)
 
Net interest expense - cash portion (2)
(276
)
(279
)
(274
)
(299
)
(1,128
)
 
(304
)
(302
)
(301
)
(306
)
(1,213
)
 
Cash taxes
(1
)
(10
)
(1
)
1

(11
)
 
3

85

(2
)

86

 
Income attributable to noncontrolling interests (3)
(25
)
(24
)
(19
)
(28
)
(96
)
 
 
 
 
 
 
 
Dividends and distributions paid to noncontrolling interests
 
 
 
 
 
 
(41
)
(27
)
(20
)
(36
)
(124
)
 
Distributable cash flow
$
723

$
637

$
764

$
748

$
2,872

 
$
780

$
867

$
822

$
828

$
3,297

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total cash distributed (4)
$
438

$
443

$
412

$
411

$
1,704

 
$
460

$
461

$
461

$
460

$
1,842

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Coverage ratios:
 
 
 
 
 
 
 
 
 
 
 
 
Distributable cash flow divided by Total cash distributed
1.65

1.44

1.85

1.82

1.69

 
1.70

1.88

1.78

1.80

1.79

 
Net income (loss) divided by Total cash distributed
0.62

0.61

0.49

(1.33
)
0.11

 
0.47

0.70

0.52

(0.14
)
0.39

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Includes proportionate share of maintenance capital expenditures of equity-method investments.
 
(2) Includes proportionate share of interest expense of equity-method investments.
 
(3) Excludes allocable share of certain EBITDA adjustments.
 
(4) Includes cash dividends paid on common stock each quarter by WMB, as well as the public unitholders share of distributions declared by WPZ for the first two quarters of 2018.
 


15


Reconciliation of "Net Income (Loss)" to “Modified EBITDA” and Non-GAAP “Adjusted EBITDA”
 
(UNAUDITED)
 
 
2018
 
2019
 
(Dollars in millions)
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Year
 
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
 Year
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$
270

$
269

$
200

$
(546
)
$
193

 
$
214

$
324

$
242

$
(66
)
$
714

 
Provision (benefit) for income taxes
55

52

190

(159
)
138

 
69

98

77

91

335

 
Interest expense
273

275

270

294

1,112

 
296

296

296

298

1,186

 
Equity (earnings) losses
(82
)
(92
)
(105
)
(117
)
(396
)
 
(80
)
(87
)
(93
)
(115
)
(375
)
 
Other investing (income) loss - net
(4
)
(68
)
(2
)
(113
)
(187
)
 
73

(126
)
107

25

79

 
Proportional Modified EBITDA of equity-method investments
169

178

205

218

770

 
190

175

181

200

746

 
Depreciation and amortization expenses
431

434

425

435

1,725

 
416

424

435

439

1,714

 
Accretion expense associated with asset retirement obligations for nonregulated operations
8

10

8

7

33

 
9

8

8

8

33

 
(Income) loss from discontinued operations, net of tax





 



15

15

 
Modified EBITDA
$
1,120

$
1,058

$
1,191

$
19

$
3,388

 
$
1,187

$
1,112

$
1,253

$
895

$
4,447

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic-Gulf
$
451

$
475

$
492

$
605

$
2,023

 
$
560

$
524

$
599

$
212

$
1,895

 
Northeast G&P
250

255

281

300

1,086

 
299

303

345

367

1,314

 
West
413

389

412

(906
)
308

 
332

278

311

311

1,232

 
Other
6

(61
)
6

20

(29
)
 
(4
)
7

(2
)
5

6

 
Total Modified EBITDA
$
1,120

$
1,058

$
1,191

$
19

$
3,388

 
$
1,187

$
1,112

$
1,253

$
895

$
4,447

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjustments included in Modified EBITDA (1):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic-Gulf
$
15

$
(19
)
$
(12
)
$
(76
)
$
(92
)
 
$

$
35

$
12

$
358

$
405

 
Northeast G&P



4

4

 
3

16

(2
)
10

27

 
West
(7
)

12

1,264

1,269

 
14

78

2

25

119

 
Other
7

71

5

(14
)
69

 
12


9

(4
)
17

 
Total Adjustments included in Modified EBITDA
$
15

$
52

$
5

$
1,178

$
1,250

 
$
29

$
129

$
21

$
389

$
568

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic-Gulf
$
466

$
456

$
480

$
529

$
1,931

 
$
560

$
559

$
611

$
570

$
2,300

 
Northeast G&P
250

255

281

304

1,090

 
302

319

343

377

1,341

 
West
406

389

424

358

1,577

 
346

356

313

336

1,351

 
Other
13

10

11

6

40

 
8

7

7

1

23

 
Total Adjusted EBITDA
$
1,135

$
1,110

$
1,196

$
1,197

$
4,638

 
$
1,216

$
1,241

$
1,274

$
1,284

$
5,015

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Adjustments by segment are detailed in the "Reconciliation of Income (Loss) from Continuing Operations Attributable to The Williams Companies, Inc. to Adjusted Income," which is also included in these materials.
 


16


Reconciliation of GAAP "Net Income (Loss)" to Non-GAAP "Modified EBITDA", "Adjusted EBITDA" and "Distributable Cash Flow"
 
 
2020 Guidance
 
(Dollars in millions, except per share amounts and coverage ratio)
Low
 
Mid
 
 High
 
 
 
 
 
 
 
 
Net income (loss)
$
1,200

 
$
1,350

 
$
1,500

 
Provision (benefit) for income taxes
 
 
450

 
 
 
Interest expense
 
 
1,180

 
 
 
Equity (earnings) losses
 
 
(450
)
 
 
 
Proportional Modified EBITDA of equity-method investments
 
 
820

 
 
 
Depreciation and amortization expenses and accretion for asset retirement obligations associated with nonregulated operations
 
 
1,750

 
 
 
Modified EBITDA
$
4,950

 
$
5,100

 
$
5,250

 
EBITDA Adjustments
 
 

 
 
 
Adjusted EBITDA
$
4,950

 
$
5,100

 
$
5,250

 
 
 
 
 
 
 
 
Net interest expense - cash portion (1)
 
 
(1,215
)
 
 
 
Maintenance capital expenditures (1)
(550
)
 
(500
)
 
(450
)
 
Cash taxes
 
 
30

 
 
 
Dividends and distributions paid to noncontrolling interests and other
 
 
(165
)
 
 
 
Distributable cash flow (DCF)
$
3,050

 
$
3,250

 
$
3,450

 
--Distributable cash flow per share (2)
$
2.50

 
$
2.67

 
$
2.83

 
 
 
 
 
 
 
 
Dividends paid
 
 
(1,950
)
 
 
 
Excess cash available after dividends
$
1,100

 
$
1,300

 
$
1,500

 
 
 
 
 
 
 
 
Dividend per share
 
 
$
1.60

 
 
 
 
 
 
 
 
 
 
Coverage ratio (Distributable cash flow / Dividends paid)
1.56x

 
1.67x

 
1.77x

 
 
 
 
 
 
 
 
(1) Includes proportionate share of equity-method investments.
 
 
 
 
 
 
(2) Distributable cash flow / diluted weighted-average common shares of 1,218 million in 2020.


17


Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted Income Available to Common Stockholders
 
 
 
 
 
 
 
 
 
2020 Guidance
 
(Dollars in millions, except per-share amounts)
Low
 
Mid
 
High
 
 
 
 
 
 
 
 
Net income (loss)
$
1,200

 
$
1,350

 
$
1,500

 
Less: Net income (loss) attributable to noncontrolling interests & preferred dividends


 
40

 


 
Net income (loss) attributable to The Williams Companies, Inc. available to common stockholders
1,160

 
1,310

 
1,460

 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
Adjustments included in Modified EBITDA
 
 

 
 
 
Adjustments below Modified EBITDA
 
 

 
 
 
Total adjustments
 
 

 
 
 
Less tax effect for above items
 
 

 
 
 
Adjusted income available to common stockholders
$
1,160

 
$
1,310

 
$
1,460

 
Adjusted diluted earnings per common share
$
0.95

 
$
1.08

 
$
1.20

 
Weighted-average shares - diluted (millions)


 
1,218

 


 
 
 
 
 
 
 
 


18


Forward-Looking Statements
The reports, filings, and other public announcements of Williams may contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions, and other matters as discussed below. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995.

All statements, other than statements of historical facts, included in this report that address activities, events, or developments that we expect, believe or anticipate will exist or may occur in the future, are forward-looking statements. Forward-looking statements can be identified by various forms of words such as “anticipates,” “believes,” “seeks,” “could,” “may,” “should,” “continues,” “estimates,” “expects,” “forecasts,” “intends,” “might,” “goals,” “objectives,” “targets,” “planned,” “potential,” “projects,” “scheduled,” “will,” “assumes,” “guidance,” “outlook,” “in-service date,” or other similar expressions. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to management and include, among others, statements regarding:

Levels of dividends to Williams stockholders;
Future credit ratings of Williams and its affiliates;
Amounts and nature of future capital expenditures;
Expansion and growth of our business and operations;
Expected in-service dates for capital projects;
Financial condition and liquidity;
Business strategy;
Cash flow from operations or results of operations;
Seasonality of certain business components;
Natural gas and natural gas liquids prices, supply, and demand;
Demand for our services.

Forward-looking statements are based on numerous assumptions, uncertainties, and risks that could cause future events or results to be materially different from those stated or implied in this report. Many of the factors that will determine these results are beyond our ability to control or predict. Specific factors that could cause actual results to differ from results contemplated by the forward-looking statements include, among others, the following:
Availability of supplies, market demand, and volatility of prices;
Development and rate of adoption of alternative energy sources;
The impact of existing and future laws and regulations, the regulatory environment, environmental liabilities, and litigation, as well as our ability to obtain necessary permits and approvals, and achieve favorable rate proceeding outcomes;
Our exposure to the credit risk of our customers and counterparties;


19


Our ability to acquire new businesses and assets and successfully integrate those operations and assets into existing businesses as well as successfully expand our facilities, and to consummate asset sales on acceptable terms;
Whether we are able to successfully identify, evaluate, and timely execute our capital projects and investment opportunities;
The strength and financial resources of our competitors and the effects of competition;
The amount of cash distributions from and capital requirements of our investments and joint ventures in which we participate;
Whether we will be able to effectively execute our financing plan;
Increasing scrutiny and changing expectations from stakeholders with respect to our environmental, social and governance practices;
The physical and financial risks associated with climate change;
The impact of operational and developmental hazards and unforeseen interruptions;
Risks associated with weather and natural phenomena, including climate conditions and physical damage to our facilities;
Acts of terrorism, cybersecurity incidents, and related disruptions;
Our costs and funding obligations for defined benefit pension plans and other postretirement benefit plans;
Changes in maintenance and construction costs, as well as our ability to obtain sufficient construction related inputs including skilled labor;
Inflation, interest rates, and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on customers and suppliers);
Risks related to financing, including restrictions stemming from debt agreements, future changes in credit ratings as determined by nationally recognized credit rating agencies, and the availability and cost of capital;
Changes in the current geopolitical situation;
Whether we are able to pay current and expected levels of dividends;
Additional risks described in our filings with the Securities and Exchange Commission.

Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement, we caution investors not to unduly rely on our forward-looking statements. We disclaim any obligations to and do not intend to update the above list or announce publicly the result of any revisions to any of the forward-looking statements to reflect future events or developments.

In addition to causing our actual results to differ, the factors listed above may cause our intentions to change from those statements of intention set forth in this report. Such changes in our intentions may also cause our results to differ. We may change our intentions, at any time and without notice, based upon changes in such factors, our assumptions, or otherwise.

Because forward-looking statements involve risks and uncertainties, we caution that there are important factors, in addition to those listed above, that may cause actual results to differ materially from those contained in the forward-looking statements. These factors are described in the following section. For a detailed discussion of those factors, see Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K filed with the SEC.


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