North American energy firm, Williams Companies Inc. (WMB) reported second-quarter 2014 adjusted earnings from continuing operations of 23 cents per share, in line with the Zacks Consensus Estimate. The bottom line increased 21.1% from the prior-year quarter level of 19 cents. Improved performance by the company’s largest income generating business segment − Williams Partners − and higher fee-based revenues aided the results.
However, for the quarter ended Jun 30, Williams Companies reported revenues of $1,678 million, down 5% year over year. Revenues also failed to meet the Zacks Consensus Estimate of $1,885 million owing to lower product sales.
Segmental Analysis
Williams Partners: This segment reported adjusted operating profit of $512 million in the quarter, up 19.6% from $428 million in the year-ago quarter. Higher business interruption insurance income − as the Geismar plant was out of service during the quarter – aided the results.
Williams NGL & Petchem Services: The unit registered adjusted operating loss of $7 million, wider than the second-quarter 2013 loss of $1 million. The results were impacted by the dropdown of certain Canadian operations to Williams Partners LP (WPZ).
Access Midstream Partners: The segment reported an adjusted operating profit of $7 million against $3 million in the year-ago quarter, as a result of higher distribution from Access Midstream Partners LP (ACMP).
Other: The segment posted adjusted operating income of $1 million in line with the previous year’s figure.
Operating and Maintenance Expenses
Operating and maintenance expenses were recorded at $308 million, 5.8% higher than $291 million in the second quarter of 2013.
Capital Expenditure & Balance Sheet
During the reported quarter, Williams Companies’ capital expenditure came in at $1,046 million. As of Jun 30, 2014, the company had long-term debt of $15,539 million, representing a debt-to-capitalization ratio of 67.4%. Williams Companies has a cash balance of about $860 million.
Guidance
Williams Companies is expected to invest roughly $4,880 million in 2014 and $3,645 million in 2015, higher than the prior guidance plan. For 2016, the company will spend $3,470 million.
Williams Companies has retained its previously declared dividend guidance of a 32% sequential hike in its third quarter 2014 dividend to 56 cents. The earlier projected annualized dividend for 2014 and 2015 was $1.96 and $2.46, respectively. For 2015 through 2017, the company plans a 15% dividend hike, as declared previously.
Zacks Rank & Other Stock Picks
Williams Companies currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at a better-ranked player in the same industry like EQT Midstream Partners LP (EQM). The partnership holds a Zacks Rank #2 (Buy).
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