Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Williams Companies Inc (WMB, Financial) delivered a record quarter of adjusted EBITDA, driven by natural gas transportation expansions and Gulf Coast storage acquisition.
- The company raised its guidance midpoint for 2024 due to better-than-expected performance on growth projects and acquisitions.
- Williams Companies Inc (WMB) achieved a 22.9% return on invested capital from 2018 to 2023, nearly double the sector median.
- The company successfully placed Transco's Regional Energy Access into full service ahead of schedule and under budget.
- Williams Companies Inc (WMB) has a visible five-year EBITDA CAGR of over 7% at the midpoint of its 2025 guidance, without equity issuance and while improving credit metrics.
Negative Points
- The company faced a challenging natural gas price environment and impactful hurricane season.
- Adjusted EPS growth lagged behind adjusted EBITDA and AFFO growth due to a step-up in non-cash depreciation expense from recent acquisitions.
- The Northeast G&P business was flat year-over-year, impacted by volumetric underperformance in dry gas systems.
- Williams Companies Inc (WMB) experienced lower gathering volumes in the West due to temporary producer reductions in the dry gas Haynesville area.
- The company's upstream joint venture operations were down due to lower realized prices.
Q & A Highlights
Q: How do you see the potential for increased production in 2025 if gas prices are supportive?
A: Alan Armstrong, CEO, mentioned that their systems are mostly loaded, but they can expand capacity through interconnects and low-cost expansions. Michael Dunn, COO, added that there is about 4 Bcf per day of gas that is either shut in or not yet flowing, which could quickly increase volumes as prices rebound.
Q: How does Williams view industry consolidation, and would entity-level consolidation make sense?
A: Alan Armstrong, CEO, stated that while acquisitions are considered, the strong organic growth within Williams makes it challenging to justify large acquisitions. The focus remains on bolt-ons that align with strategic goals.
Q: Are you seeing upward pressure on rates as existing contracts come up for renewal due to increased competition for pipeline space?
A: Alan Armstrong, CEO, explained that while existing capacity is valuable, they cannot price it up due to original base capacity agreements. However, expansions along existing systems offer high returns due to relatively low costs.
Q: With the large opportunity set in front of you, how are you thinking about potential increases in CapEx spending?
A: Alan Armstrong, CEO, noted that high-return projects are generating significant capacity, making it difficult to exhaust financial resources. The focus is on maintaining a balance between growth and financial capacity.
Q: Can you provide an update on the Regional Energy Access project and any legal actions?
A: Michael Dunn, COO, stated that all filings have been made, and they are awaiting FERC action. The pipeline is operational, and they are confident in obtaining the necessary certificate to operate.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
