WILLIAMS COMPANIES, INC. - FORM 8-K - EX-99.2

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EX-99.1 - EX-99.1 - WILLIAMS COMPANIES, INC.	wmb_20180331xer.htm
8-K - 8-K - WILLIAMS COMPANIES, INC.	wmb_20180331x8kxer.htm

EXHIBIT 99.2






	Non-GAAP Reconciliations,
	Financial Highlights, and Operating Statistics

	(UNAUDITED)

	Final

	March 31, 2018



Reconciliation of Income (Loss) Attributable to The Williams Companies, Inc. to Adjusted Income
(UNAUDITED)
	2017															2018
(Dollars in millions, except per-share amounts)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year			1st Qtr

Income (loss) attributable to The Williams Companies, Inc. available to common stockholders	$	373		$	81		$	33		$	1,687		$	2,174		$	152

Income (loss) - diluted earnings (loss) per common share	$	.45		$	.10		$	.04		$	2.03		$	2.62		$	.18
Adjustments:
Williams Partners
Estimated minimum volume commitments	$	15		$	15		$	18		$	(48	)	$	—		$	—
Impairment of certain assets	—			—			1,142			9			1,151			—
Ad valorem obligation timing adjustment	—			—			7			—			7			—
Organizational realignment-related costs	4			6			6			2			18			—
(Gain) loss related to Canada disposition	(3		)	(1		)	4			4			4			—
Severance and related costs	9			4			5			4			22			—
Constitution Pipeline project development costs	2			6			4			4			16			2
ACMP Merger and transition costs	—			4			3			4			11			—
Share of impairment at equity-method investments	—			—			1			—			1			—
(Gain) loss on asset retirement	—			—			(5		)	5			—			—
Geismar Incident adjustments	(9		)	2			8			(1		)	—			—
Gain on sale of Geismar Interest	—			—			(1,095		)	—			(1,095		)	—
Gains from contract settlements and terminations	(13		)	(2		)	—			—			(15		)	—
Accrual for loss contingency	9			—			—			—			9			—
(Gain) loss on early retirement of debt	(30		)	—			3			—			(27		)	7
Gain on sale of RGP Splitter	—			(12		)	—			—			(12		)	—
Settlement charge from pension early payout program	—			—			—			35			35			—
Regulatory charges resulting from Tax Reform	—			—			—			713			713			4
Share of regulatory charges resulting from Tax Reform for equity-method investments	—			—			—			11			11			2
Expenses associated with Financial Repositioning	—			2			—			—			2			—
Expenses associated with strategic asset monetizations	1			4			—			—			5			—
Total Williams Partners adjustments	(15		)	28			101			742			856			15
Other
Impairment of certain assets	—			23			68			—			91			—
Loss related to Canada disposition	1			—			—			1			2			—
Expenses associated with strategic alternatives	1			3			5			—			9			—
Settlement charge from pension early payout program	—			—			—			36			36			—
Regulatory charges resulting from Tax Reform	—			—			—			63			63			—
Expenses associated with Financial Repositioning	8			—			—			—			8			—
Total Other adjustments	10			26			73			100			209			—
Adjustments included in Modified EBITDA	(5		)	54			174			842			1,065			15

Adjustments below Modified EBITDA
Gain on disposition of equity-method investment - Williams Partners	(269		)	—			—			—			(269		)	—
Accelerated depreciation by equity-method investments	—			—			—			9			9			—
Change in depreciable life associated with organizational realignment - Williams Partners	(7		)	—			—			—			(7		)	—
Allocation of adjustments to noncontrolling interests	77			(10		)	(28		)	(199		)	(160		)	(5		)
	(199		)	(10		)	(28		)	(190		)	(427		)	(5		)
Total adjustments	(204		)	44			146			652			638			10
Less tax effect for above items	77			(17		)	(55		)	(246		)	(241		)	(3		)
Adjustments for tax-related items ⁽¹⁾	(127		)	—			—			(1,923		)	(2,050		)	—

Adjusted income available to common stockholders	$	119		$	108		$	124		$	170		$	521		$	159
Adjusted diluted earnings per common share ⁽²⁾	$	.14		$	.13		$	.15		$	.20		$	.63		$	.19
Weighted-average shares - diluted (thousands)	826,476			828,575			829,368			829,607			828,518			830,197

(1) The first quarter of 2017 includes an unfavorable adjustment related to the release of a valuation allowance. The fourth quarter of 2017 includes an unfavorable adjustment to reverse the tax benefit associated with remeasuring our deferred tax balances at a lower corporate rate resulting from Tax Reform.
(2) 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.



Reconciliation of "Net Income (Loss)" to “Modified EBITDA” and Non-GAAP “Adjusted EBITDA”
(UNAUDITED)
	2017															2018
(Dollars in millions)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year			1st Qtr

Net income (loss)	$	569		$	193		$	125		$	1,622		$	2,509		$	270
Provision (benefit) for income taxes	37			65			24			(2,100		)	(1,974		)	55
Interest expense	280			271			267			265			1,083			273
Equity (earnings) losses	(107		)	(125		)	(115		)	(87		)	(434		)	(82		)
Other investing (income) loss - net	(272		)	(2		)	(4		)	(4		)	(282		)	(4		)
Proportional Modified EBITDA of equity-method investments	194			215			202			184			795			169
Depreciation and amortization expenses	442			433			433			428			1,736			431
Accretion expense associated with asset retirement obligations for nonregulated operations	7			9			7			10			33			8
Modified EBITDA	$	1,150		$	1,059		$	939		$	318		$	3,466		$	1,120

Williams Partners	$	1,132		$	1,076		$	1,000		$	408		$	3,616		$	1,107
Other	18			(17		)	(61		)	(90		)	(150		)	13
Total Modified EBITDA	$	1,150		$	1,059		$	939		$	318		$	3,466		$	1,120

Adjustments included in Modified EBITDA ⁽¹⁾:

Williams Partners	$	(15	)	$	28		$	101		$	742		$	856		$	15
Other	10			26			73			100			209			—
Total Adjustments included in Modified EBITDA	$	(5	)	$	54		$	174		$	842		$	1,065		$	15

Adjusted EBITDA:

Williams Partners	$	1,117		$	1,104		$	1,101		$	1,150		$	4,472		$	1,122
Other	28			9			12			10			59			13
Total Adjusted EBITDA	$	1,145		$	1,113		$	1,113		$	1,160		$	4,531		$	1,135

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



Dividend Coverage Ratio
(UNAUDITED)
	2017															2018
(Dollars in millions, except per share amounts)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year			1st Qtr

Distributions from WPZ (accrued / “as declared” basis)	$	421		$	421		$	421		$	421		$	1,684		$	431
Other Segment Adjusted EBITDA	28			9			12			10			59			13
Corporate interest	(66		)	(65		)	(66		)	(64		)	(261		)	(64		)
Subtotal	383			365			367			367			1,482			380
WMB cash tax rate	0		%	0		%	2		%	2		%	1		%	0		%
WMB cash taxes (excludes cash taxes paid by WPZ)	—			—			(7		)	(9		)	(16		)	—
Other Segment Maintenance Capital	(3		)	(5		)	(5		)	(9		)	(22		)	(9		)
WMB cash available for dividends and other uses ⁽¹⁾	$	380		$	360		$	355		$	349		$	1,444		$	371
WMB dividends paid	(248		)	(248		)	(248		)	(248		)	(992		)	(281		)
Excess cash available after dividends	$	132		$	112		$	107		$	101		$	452		$	90

Dividend per share	$	0.3000		$	0.3000		$	0.3000		$	0.3000		$	1.2000		$	0.3400

Coverage ratio ⁽²⁾	1.53			1.45			1.43			1.41			1.46			1.32

(1) Effective with the first quarter of 2018, Williams increased its regular dividend from $0.30 per share to $0.34 per share.
(2) WMB cash available for dividends and other uses / WMB dividends paid.



Consolidated Statement of Operations
(UNAUDITED)
	2017 ⁽²⁾															2018
(Dollars in millions, except per-share amounts)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year			1st Qtr

Revenues:
Service revenues	$	1,261		$	1,282		$	1,310		$	1,459		$	5,312		$	1,351
Service revenues - commodity consideration ⁽³⁾	—			—			—			—			—			101
Product sales	727			642			581			769			2,719			636
Total revenues	1,988			1,924			1,891			2,228			8,031			2,088
Costs and expenses:
Product costs	579			537			504			680			2,300			613
Processing commodity expenses ⁽³⁾	—			—			—			—			—			35
Operating and maintenance expenses	371			392			403			410			1,576			357
Depreciation and amortization expenses	442			433			433			428			1,736			431
Selling, general, and administrative expenses	161			153			138			142			594			132
Impairment of certain assets	1			25			1,210			12			1,248			—
Gain on sale of Geismar Interest	—			—			(1,095		)	—			(1,095		)	—
Regulatory charges resulting from Tax Reform	—			—			—			674			674			—
Other (income) expense - net	4			6			24			37			71			29
Total costs and expenses	1,558			1,546			1,617			2,383			7,104			1,597
Operating income (loss)	430			378			274			(155		)	927			491
Equity earnings (losses)	107			125			115			87			434			82
Other investing income (loss) - net	272			2			4			4			282			4
Interest incurred	(287		)	(280		)	(275		)	(274		)	(1,116		)	(282		)
Interest capitalized	7			9			8			9			33			9
Other income (expense) - net	77			24			23			(149		)	(25		)	21
Income (loss) before income taxes	606			258			149			(478		)	535			325
Provision (benefit) for income taxes	37			65			24			(2,100		)	(1,974		)	55
Net income (loss)	569			193			125			1,622			2,509			270
Less: Net income (loss) attributable to noncontrolling interests	196			112			92			(65		)	335			118
Net income (loss) attributable to The Williams Companies, Inc.	$	373		$	81		$	33		$	1,687		$	2,174		$	152

Diluted earnings (loss) per common share:
Net income (loss) ⁽¹⁾	$	.45		$	.10		$	.04		$	2.03		$	2.62		$	.18

Weighted-average number of shares (thousands)	826,476			828,575			829,368			829,607			828,518			830,197

Common shares outstanding at end of period (thousands)	826,239			826,398			826,723			826,836			826,836			827,607
Market price per common share (end of period)	$	29.59		$	30.28		$	30.01		$	30.49		$	30.49		$	24.86
Cash dividends declared per share	$	.30		$	.30		$	.30		$	.30		$	1.20		$	.34

(1) The sum of earnings (loss) per share for the quarters may not equal the total earnings (loss) per share for the year due to changes in the weighted-average number of common shares outstanding.
(2) Recast for ASU 2017-07 "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost", effective January 1, 2018.
(3) Line items are new in conjunction with the implementation of Accounting Standard Codification Topic 606, "Revenue from Contracts with Customers" (ASC 606).



Williams Partners
(UNAUDITED)
	2017														2018
(Dollars in millions)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr		Year			1st Qtr

Revenues:
Service revenues	$	1,256		$	1,277		$	1,304		$	1,455	$	5,292		$	1,346
Service revenues - commodity consideration ⁽¹⁾	—			—			—			—		—			$	101
Product sales	727			642			581			768		2,718			636
Total revenues	1,983			1,919			1,885			2,223		8,010			2,083

Segment costs and expenses:
Product costs	579			537			504			680		2,300			613
Processing commodity expenses⁽¹⁾	—			—			—			—		—			35
Operating and maintenance expenses	353			376			387			414		1,530			343
Selling, general, and administrative expenses	156			154			140			160		610			138
Impairment of certain assets	1			2			1,142			11		1,156			—
Gain on sale of Geismar Interest	—			—			(1,095		)	—		(1,095		)	—
Regulatory charges resulting from Tax Reform	—			—			—			713		713			4
Other segment costs and expenses	(44		)	(11		)	9			21		(25		)	12
Total segment costs and expenses	1,045			1,058			1,087			1,999		5,189			1,145
Proportional Modified EBITDA of equity-method investments	194			215			202			184		795			169
Modified EBITDA	1,132			1,076			1,000			408		3,616			1,107
Adjustments	(15		)	28			101			742		856			$	15
Adjusted EBITDA	$	1,117		$	1,104		$	1,101		$	1,150	$	4,472		$	1,122
Statistics for Operated Assets
Interstate Transmission
Throughput (Tbtu)	1,158.1			1,053.0			1,094.9			1,226.6		4,532.6			1,326.0
Avg. daily transportation volumes (Tbtu)	12.8			11.6			11.9			13.4		12.5			14.7
Avg. daily firm reserved capacity (Tbtu)	15.8			16.2			17.1			17.9		16.8			18.4
Gathering and Processing
Gathering volumes (Bcf per day) - Consolidated ⁽²⁾	7.86			7.98			8.20			8.54		8.15			8.26
Gathering volumes (Bcf per day) - Non-consolidated ⁽³⁾	4.10			4.12			3.87			3.89		3.99			4.06
Plant inlet natural gas volumes (Bcf per day) - Consolidated ⁽²⁾	2.92			2.98			3.08			3.22		3.05			3.18
Plant inlet natural gas volumes (Bcf per day) - Non-consolidated ⁽³⁾	0.54			0.53			0.39			0.27		0.43			0.24
Consolidated ⁽²⁾
Ethane margin ($/gallon)	$	.03		$	.01		$	.03		$	.03	$	.03		$	.01
Non-ethane margin ($/gallon)	$	.45		$	.41		$	.45		$	.63	$	.48		$	.68
NGL margin ($/gallon)	$	.33		$	.25		$	.29		$	.41	$	.32		$	.35
Ethane equity sales (Mbbls/d)	11			17			17			15		15			23
Non-ethane equity sales (Mbbls/d)	29			26			25			25		26			25
NGL equity sales (Mbbls/d)	40			43			42			40		41			48
Ethane production (Mbbls/d)	40			53			49			62		51			65
Non-ethane production (Mbbls/d)	90			93			99			104		97			102
NGL production (Mbbls/d)	130			146			148			166		148			167
Non-consolidated ⁽³⁾
NGL equity sales (Mbbls/d)	5			4			5			4		5			3
NGL production (Mbbls/d)	21			22			22			19		21			18
Petrochemical Services
Geismar ethylene sales volumes (million lbs)	266			300			—			—		566			—
Geismar ethylene margin ($/lb) ⁽⁴⁾	$	.19		$	.13		$	—		$	—	$	.16		$	—
Overland Pipeline Company ⁽³⁾
NGL transportation volumes (Mbbls)	18,338			20,558			21,015			21,425		81,336			21,263

(1) Line items are new in conjunction with the implementation of ASC 606.
(2) Excludes volumes associated with equity-method investments that are not consolidated for financial reporting purposes.
(3) Includes 100% of the volumes associated with operated equity-method investments.
(4) Ethylene margin and ethylene margin per pound are calculated using financial results determined in accordance with GAAP, which include realized ethylene sales prices and ethylene COGS. Realized sales and COGS per unit metrics may vary from publicly quoted market indices or spot prices due to various factors, including, but not limited to, basis differentials, transportation costs, contract provisions, and inventory accounting methods. The Geismar operations were sold in July 2017.



Capital Expenditures and Investments
(UNAUDITED)
	2017															2018
(Dollars in millions)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year			1st Qtr

Capital expenditures:
Williams Partners	$	509		$	540		$	638		$	687		$	2,374		$	948
Other	2			5			6			12			25			9
Total ⁽¹⁾	$	511		$	545		$	644		$	699		$	2,399		$	957

Purchases of investments:
Williams Partners	$	52		$	27		$	24		$	29		$	132		$	21
Other	—			—			—			—			—			—
Total	$	52		$	27		$	24		$	29		$	132		$	21

Summary:
Williams Partners	$	561		$	567		$	662		$	716		$	2,506		$	969
Other	2			5			6			12			25			9
Total	$	563		$	572		$	668		$	728		$	2,531		$	978

Capital expenditures incurred and purchases of investments:
Increases to property, plant, and equipment	$	569		$	591		$	666		$	836		$	2,662		$	934
Purchases of investments	52			27			24			29			132			21
Total	$	621		$	618		$	690		$	865		$	2,794		$	955

⁽¹⁾ Increases to property, plant, and equipment	$	569		$	591		$	666		$	836		$	2,662		$	934
Changes in related accounts payable and accrued liabilities	(58		)	(46		)	(22		)	(137		)	(263		)	23
Capital expenditures	$	511		$	545		$	644		$	699		$	2,399		$	957



Depreciation and Amortization and Other Selected Financial Data
(UNAUDITED)
	2017														2018
(Dollars in millions)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year		1st Qtr

Depreciation and amortization:
Williams Partners	$	433		$	423		$	424		$	420		$	1,700	$	423
Other	9			10			9			8			36		8
Total	$	442		$	433		$	433		$	428		$	1,736	$	431

Other selected financial data:
Cash and cash equivalents	$	639		$	1,918		$	1,172		$	899				$	1,292

Total assets	$	47,512		$	48,770		$	46,120		$	46,352				$	47,052

Capital structure:
Debt
Current	$	—		$	1,951		$	502		$	501				$	501
Noncurrent	$	21,825		$	21,325		$	20,567		$	20,434				$	21,379
Stockholders’ equity	$	8,444		$	8,306		$	8,109		$	9,656				$	9,473
Debt to debt-plus-stockholders’ equity ratio	72.1		%	73.7		%	72.2		%	68.4		%			69.8		%

Cash distributions received from limited partner interest in Williams Partners L.P.	$	597		$	421		$	422		$	421		$	1,861	$	421



WMB Dividend Coverage Ratio
	2018
(Dollars in billions, except per share amounts)	Guidance

Distributions from WPZ (accrued / “as declared” basis)	$	1.800
Other Segment Adjusted EBITDA	0.025
Corporate interest	(0.250		)
Subtotal	$	1.575
WMB cash tax rate	0.0		%
WMB cash taxes (excludes cash taxes paid by WPZ)	—
Other Segment Maintenance Capital	(0.050		)
WMB cash available for dividends and other uses	$	1.525
WMB dividends paid	(1.125		)
Excess cash available after dividends	$	0.400

Dividend per share	$	1.36

Coverage ratio ⁽¹⁾	1.36		x

Memo:
WMB Economic Interest in WPZ Cash Coverage - Guidance Midpoint ⁽²⁾	$	0.445
WMB cash available for dividends and other uses	1.525
WMB Economic Distributable Cash Flow ⁽³⁾	$	1.970

Economic coverage ratio ⁽⁴⁾	1.75		x

Notes:
WMB does not expect to be a U.S. federal income cash taxpayer through at least 2021, excluding taxes on any potential asset monetizations.
(1) WMB cash available for dividends and other uses / WMB dividends paid
(2) WMB pro rata share (~74%) of WPZ Distributable cash flow in excess of Total cash distributed
(3) WMB Economic Interest in WPZ Cash Coverage + WMB cash available for dividends and other uses
(4) WMB Economic Distributable Cash Flow / WMB dividends paid

WILLIAMS COMPANIES, INC. - FORM 8-K - EX-99.2 - May 2, 2018

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