Williams Partners L.P. (NYSE: WPZ) today announced its financial
results for the three and six months ended June 30, 2018.
Second-Quarter 2018 Highlights
- 2Q 2018 Net Income of $426 Million; Up
$106 Million over 2Q 2017
- 2Q 2018 Adjusted EBITDA of $1.097
Billion
- 2Q 2018 DCF of $705 Million, Up $7
Million over 2Q 2017
- Transco Transportation Revenues Up $50
Million in 2Q 2018; Up $114 Million Year-to-Date or 16% - Driven by
Big 5 Expansion Projects Placed In Service in 2017 as well as
Mainline Service on Atlantic Sunrise in 2018
- Current Business Segments Increased
Adjusted EBITDA by $18 Million in 2Q 2018 vs. 2Q 2017;
Year-to-Date, Current Business Segments Up $71 Million
- Year-to-Date, Cash Distribution
Coverage Ratio of 1.25x.
Summary Financial Information 2Q
YTD Amounts in millions, except per-unit amounts. Per unit
amounts are reported on a diluted basis. All amounts are
attributable to Williams Partners L.P. 2018 2017 2018
2017 GAAP Measures Cash Flow from Operations $ 958 $
913 $ 1,710 $ 1,765 Net income (loss) $ 426 $ 320 $ 786 $ 954 Net
income (loss) per common unit $ 0.44 $ 0.33 $ 0.81 $ 1.00
Non-GAAP Measures (1) Adjusted EBITDA $ 1,097 $ 1,104 $ 2,219 $
2,221 DCF attributable to partnership operations $ 705 $ 698 $
1,489 $ 1,450 Cash distribution coverage ratio 1.17 x 1.22 x 1.25 x
1.27 x (1) Adjusted EBITDA, distributable cash flow (DCF)
and cash distribution coverage ratio are non-GAAP measures.
Reconciliations to the most relevant measures included in GAAP are
attached to this news release.
Second-Quarter 2018 Financial Results
Williams Partners reported unaudited second-quarter 2018 net
income attributable to controlling interests of $426 million, a
$106 million improvement from second-quarter 2017. The favorable
change was driven primarily by a $68 million increase in operating
income due primarily to an increase in service revenues and NGL
margins partially offset by the absence of $25 million of operating
income earned in second-quarter 2017 by our former olefins
operations. Other Investing Income for the quarter was favorably
impacted by a $62 million gain on the deconsolidation of the
partnership's interests in the Jackalope Gas Gathering System.
Partially offsetting the improvements was a $33 million decrease in
equity earnings primarily driven by lower earnings at Discovery
Producer Services.
Year-to-date, Williams Partners reported unaudited net income of
$786 million, a $168 million decrease from the same period in 2017.
The unfavorable change was driven primarily by a $202 million
decrease in Other Investing Income due largely to the absence of a
$269 million gain in first-quarter 2017 associated with a
transaction involving certain joint-venture interests in the
Permian Basin and Marcellus Shale, partially offset by a $62
million gain on the partnership's interests in the Jackalope Gas
Gathering System. The unfavorable change also reflects a $58
million decrease in equity earnings primarily driven by lower
earnings at Discovery Producer Services. Partially offsetting the
decrease was a $110 million improvement in operating income, due
primarily to an increase in service revenues and NGL margins
overcoming the absence of $57 million of operating income earned in
the first half of 2017 by our former olefins operations.
Williams Partners reported second-quarter 2018 Adjusted EBITDA
of $1.097 billion, a $7 million decrease from second-quarter 2017.
The change was driven by a $37 million decrease in proportional
EBITDA from joint ventures due primarily to less production on the
Discovery system, the absence of $23 million Adjusted EBITDA earned
in second-quarter 2017 from the NGL & Petchem Services segment
primarily as a result of the sale of the Geismar olefins facility,
and $28 million increased operating & maintenance (O&M)
expenses at the partnership's continuing businesses primarily due
to increased reliability and integrity costs at Transco. Partially
offsetting these decreases was a $46 million increase in service
revenues, driven primarily by expansion projects brought online by
Transco in 2017 and 2018. Second-quarter 2018 service revenues
would have increased by $67 million over second-quarter 2017 if
revenue-recognition standards adopted in 2018 had been applied to
second-quarter 2017 results. Additionally, NGL and Marketing
margins improved by $35 million. Williams Partners' current
business segments increased Adjusted EBITDA by $18 million in
second quarter 2018 vs. second-quarter 2017.
Year-to-date, Williams Partners reported Adjusted EBITDA of
$2.219 billion, a decrease of $2 million from the same six-month
reporting period in 2017. The modest change was driven by the
absence of $72 million Adjusted EBITDA earned in 2017 from the NGL
& Petchem Services segment primarily as a result of the sale of
the Geismar olefins facility, a $60 million decrease in
proportional EBITDA from joint ventures due primarily to less
production on the Discovery system, $42 million increased O&M
expenses at the partnership's continuing businesses primarily due
to increased reliability and integrity costs at Transco, and a $12
million regulatory charge per approved pipeline transportation
rates associated with the Tax Reform Act. Partially offsetting
these decreases was $125 million of increased service revenues,
driven primarily by expansion projects brought online by Transco in
2017 and 2018. Service revenue would have increased by $165 million
over first half of 2017 if revenue-recognition standards adopted in
2018 had been applied to first-half 2017 results. Additionally, NGL
and Marketing margins improved by $49 million. Year-to-date,
Williams Partners' current business segments increased Adjusted
EBITDA by $71 million vs. the same reporting period in 2017.
Distributable Cash Flow and Distributions
For second-quarter 2018, Williams Partners generated $705
million in distributable cash flow (DCF) attributable to
partnership operations, compared with $698 million in DCF
attributable to partnership operations for second-quarter 2017. DCF
was unfavorably impacted by the partnership's change in Adjusted
EBITDA and by a $52 million increase in maintenance capital
expenditures primarily due to accelerated inspections and other key
maintenance needs moved into this quarter to take advantage of
timing of outages associated with expansion construction work.
Beginning with first-quarter 2018 results, the partnership has
discontinued the adjustment which removed the DCF associated with
2016 contract restructuring prepayments in the Barnett Shale and
Mid-Continent region. For second-quarter 2018, the cash
distribution coverage ratio was 1.17x.
Year-to-date, Williams Partners generated $1.489 billion in DCF,
a $39 million increase over the same period in 2017. The adjustment
described in the previous paragraph involving the removal of DCF
associated with 2016 contract restructuring prepayments in the
Barnett Shale and MId-Continent region positively impacted
year-to-date DCF results. DCF was unfavorably impacted by a $99
million increase in maintenance capital expenditures primarily due
to accelerated inspections and other key maintenance needs moved
into the first half of 2018 to take advantage of timing of outages
associated with expansion construction work. The cash distribution
coverage ratio for the first six-month reporting period was
1.25x.
Williams Partners recently announced a regular quarterly cash
distribution of $0.629 per unit, payable Aug. 10, 2018, to its
common unitholders of record at the close of business on Aug. 3,
2018.
CEO Perspective
Alan Armstrong, chief executive officer of Williams Partners’
general partner, made the following comments:
"Our consistent strategy of connecting growing natural gas
demand to growing low-cost gas production delivered results which
slightly exceeded our business plan for second quarter, and we look
forward to an even stronger second half of the year as the Atlantic
Sunrise project nears completion and producer activity on our
systems in the Northeast and Wyoming is ramping up. We are also
excited about the transactions announced earlier this week. Selling
assets in a maturing basin at attractive multiples, and redeploying
that capital to higher growth basins enhances our position to
capitalize on future growth opportunities and follows our strategy
to connect the best supplies to the best markets.
"It is clear that our focus on natural gas volume growth
combined with our advantaged infrastructure and the continued
confidence in low-price natural gas continues to drive demand for
services on our systems. Placing the Transco expansion projects
into service in 2017 and 2018 is now delivering exceptional
fee-based revenue growth - a $50 million increase for
second-quarter 2018 over second-quarter 2017 for Transco
transportation revenues thanks to those expansion projects coming
online. Our growth was not limited to Transco as Williams Partners'
current business segments posted year-over-year increases in
Adjusted EBITDA for the quarter and year-to-date.
"I'm pleased our teams were able to complete so much maintenance
work this quarter, especially in our high-growth areas where we
accelerated inspections and other key maintenance needs into this
quarter to take advantage of the timing of outages associated with
expansion construction work and project work - particularly
important in association with a project like Atlantic Sunrise,
which is preparing to bring additional loads on to that system. I'm
proud of our team's exceptional focus on safety and environmental
compliance throughout the construction and commissioning process on
this large and complex project.
"We are also making great progress on several other projects. In
Wyoming, we just announced an expansion on our Jackalope Gas
Gathering System and associated Bucking Horse gas processing
facility in the Powder River Basin, Niobrara Shale play that will
increase processing capacity to 345 million cubic feet per day
('MMcf/d') by the end of 2019 to meet growing customer demand in
this underserved growth basin. We also completed major
modifications to our Mobile Bay processing plant to enable the
handling of large volumes of gas liquids from Shell's Norphlet
fields in the Eastern Gulf of Mexico. Additionally, a major
expansion of our Oak Grove gas-processing facility in West Virginia
is also underway. Construction is going well on Transco's Gulf
Connector project, and we realized great progress on the permitting
of several other Transco projects in the Northeast and Northwest
Pipeline in Seattle."
Business Segment Results
For second-quarter 2018 results, Williams Partners' operations
are comprised of the following reportable segments: Atlantic-Gulf,
West, and Northeast G&P. Following the sale of Williams
Partners' ownership interest in the Geismar olefins plant on July
6, 2017, the partnership's NGL & Petchem Services segment
no longer contained any operating assets.
Amounts in millions
2Q 2018
2Q 2017 YTD 2018 YTD 2017
ModifiedEBITDA Adjust.
AdjustedEBITDA ModifiedEBITDA
Adjust. Adjusted
EBITDA
Modified
EBITDA
Adjust. Adjusted
EBITDA
Modified
EBITDA
Adjust. Adjusted
EBITDA
Atlantic -Gulf $ 475 ($19 ) $ 456 $ 454 $ 8
$ 462 $ 926 ($4 ) $ 922 $ 904 $ 11
$ 915 West 389 — 389 356 16 372 802 (7 ) 795 741 20 761
Northeast G&P 255 — 255 247 1 248 505 — 505 473 2 475 NGL &
Petchem Services — — — 30 (7 ) 23 — — — 81 (9 ) 72 Other (4
) 1 (3 ) (11 ) 10
(1 ) (11 ) 8
(3 ) 9 (11 ) (2 ) Total $
1,115 ($18 ) $ 1,097 $ 1,076
$ 28 $ 1,104 $ 2,222 ($3
) $ 2,219 $ 2,208 $ 13 $ 2,221
Williams Partners uses Modified EBITDA for its
segment reporting. Definitions of Modified EBITDA and Adjusted
EBITDA and schedules reconciling these measures to net income are
included in this news release.
Atlantic-Gulf
This segment includes the partnership’s interstate natural gas
pipeline, Transco, and significant natural gas gathering and
processing and crude oil production handling and transportation
assets in the Gulf Coast region, including a 51 percent interest in
Gulfstar One (a consolidated entity), which is a proprietary
floating production system, and various petrochemical and feedstock
pipelines in the Gulf Coast region, as well as a 50 percent
equity-method investment in Gulfstream, a 41 percent interest in
Constitution (a consolidated entity) which is developing a pipeline
project, and a 60 percent equity-method investment in
Discovery.
The Atlantic-Gulf segment reported Modified EBITDA of $475
million for second-quarter 2018, compared with $454 million for
second-quarter 2017. Adjusted EBITDA decreased by $6 million to
$456 million for the same time period. The improvement in Modified
EBITDA reflects $43 million increased service revenues driven
primarily by Transco's 'Big 5' expansion projects placed into
service in 2017 as well as mainline service on Atlantic Sunrise in
2018. The quarter was also favorably impacted by a $20 million
benefit associated with the Tax Reform Act. Partially offsetting
these increases were a $36 million decrease in proportional EBITDA
from joint ventures due primarily to a significant decline in
volumes on the deepwater Discovery system's Hadrian field and a $16
million increase in O&M expenses mainly related to pipeline
integrity program costs. The adjustment associated with the Tax
Reform Act discussed in this paragraph is excluded from Adjusted
EBITDA.
Year-to-date, the Atlantic-Gulf segment reported Modified EBITDA
of $926 million, an increase of $22 million over the same six-month
period in 2017. Adjusted EBITDA increased $7 million to $922
million. The improvement in Modified EBITDA reflects $116 million
increased service revenues due primarily to Transco expansion
projects led by the 'Big 5' placed into service in 2017 as well as
mainline service on Atlantic Sunrise in 2018. Partially offsetting
this increase was a $65 million decrease in proportional EBITDA
from joint ventures due primarily to a significant decline in
volumes on the deepwater Discovery system's Hadrian field and a $39
million increase in O&M expenses mainly related to pipeline
integrity program costs.
West
This segment includes the partnership’s interstate natural gas
pipeline, Northwest Pipeline, and natural gas gathering,
processing, and treating operations in New Mexico, Colorado, and
Wyoming, as well as the Barnett Shale region of north-central
Texas, the Eagle Ford Shale region of south Texas, the Haynesville
Shale region of northwest Louisiana, and the Mid-Continent region
which includes the Anadarko, Arkoma, Delaware and Permian basins.
This reporting segment also includes an NGL and natural gas
marketing business, storage facilities, and an undivided 50 percent
interest in an NGL fractionator near Conway, Kansas, a 50 percent
equity-method investment in OPPL and a 50 percent interest in
Jackalope Gas Gathering Services, L.L.C. (Jackalope) (an
equity-method investment following deconsolidation as of June 30,
2018). The partnership completed the sale of its 50 percent
equity-method investment in a Delaware Basin gas gathering system
in the Mid-Continent region during first-quarter 2017.
The West segment reported Modified EBITDA of $389 million for
second-quarter 2018, compared with $356 million for second-quarter
2017. Adjusted EBITDA increased by $17 million to $389 million. The
increase in Adjusted EBITDA was driven primarily by a $37 million
improvement in NGL and marketing margins due to favorable prices.
Partially offsetting the increases was a $10 million unfavorable
change in other income and expense primarily driven by a $6 million
regulatory charge per approved pipeline transportation rates
associated with the Tax Reform Act. Additionally, service revenue
declined by $7 million, primarily due to lower rates at Northwest
Pipeline per its 2017 rate settlement agreement, while the
favorable impact of higher volumes was offset by an unfavorable
change in recognition of deferred revenue driven by the adoption of
new accounting standards in 2018. Second-quarter 2018 service
revenues would have increased by $14 million over second-quarter
2017 if the new revenue-recognition standards adopted in 2018 had
been applied to second-quarter 2017 results, which would have
reduced second-quarter 2017 results by $21 million. The variance in
Adjusted EBITDA between the periods was $16 million less favorable
than the variance in Modified EBITDA primarily due to the fact that
Adjusted EBITDA for both periods included estimated minimum volume
commitments (MVCs). While estimated MVCs were not recognized in
Modified EBITDA until the fourth quarter in 2017, with the adoption
of new accounting standards, estimated MVC revenue is recognized
earlier in 2018 Modified EBITDA.
Year-to-date, the West segment reported Modified EBITDA of $802
million, an increase of $61 million over the same six-month period
in 2017. Adjusted EBITDA increased by $34 million to $795 million.
The increase in Adjusted EBITDA was driven primarily by $52 million
increased NGL and marketing margins. Partially offsetting this
increase was a $12 million regulatory charge per approved pipeline
transportation rates associated with the Tax Reform Act, and a $9
million decline in service revenue, which includes the favorable
impact of higher volumes offset by the unfavorable change in
recognition of deferred revenue driven by the adoption of new
accounting standards in 2018. First-half 2018 service revenues
would have increased by $31 million over first-half 2017 results if
revenue-recognition standards adopted in 2018 had been applied to
first half 2017 results, which would have reduced first half 2017
results by $40 million. The variance in Adjusted EBITDA between the
periods was $27 million less favorable than the variance in
Modified EBITDA primarily due to the fact that Adjusted EBITDA for
both periods included estimated MVCs. While estimated MVCs were not
recognized in Modified EBITDA until the fourth quarter in 2017,
with the adoption of new accounting standards, estimated MVC
revenue is recognized earlier in 2018 Modified EBITDA.
Northeast G&P
This segment includes the partnership’s natural gas gathering
and processing, compression and NGL fractionation businesses in the
Marcellus Shale region primarily in Pennsylvania, New York, and
West Virginia and Utica Shale region of eastern Ohio, as well as a
66 percent interest in Cardinal (a consolidated entity), a 62
percent equity-method investment in UEOM, a 69 percent
equity-method investment in Laurel Mountain, a 58 percent
equity-method investment in Caiman II, and Appalachia Midstream
Services, LLC, which owns an approximate average 66 percent
equity-method investment in multiple gas gathering systems in the
Marcellus Shale.
The Northeast G&P segment reported Modified EBITDA of $255
million for second-quarter 2018, compared with $247 million for
second-quarter 2017. Adjusted EBITDA increased by $7 million to
$255 million. The improvement in both measures was driven primarily
by $15 million increased service revenues due to higher volumes at
the Susquehanna and Ohio River systems.
Year-to-date, the Northeast G&P segment reported Modified
EBITDA of $505 million, an increase of $32 million over the same
six-month period in 2017. Adjusted EBITDA increased by $30 million
to $505 million. The improvements in both measures was driven
primarily by $26 million increased service revenues due to higher
volumes at the Susquehanna and Ohio River systems, and a $9 million
increase in proportional EBITDA of joint ventures due largely to
the partnership's increase in ownership in two Marcellus Shale
gathering systems in first-quarter 2017. Partially offsetting these
improvements was a $4 million increase in O&M expenses.
NGL & Petchem Services
In second-quarter 2017, this segment produced $30 million in
Modified EBITDA and $23 million in Adjusted EBITDA. For the first
six-month reporting period of 2017, this segment produced $81
million in Modified EBITDA and $72 million in Adjusted EBITDA. As
of July 7, 2017, this segment no longer contained any operating
assets following the sale of the Geismar olefins facility on July
6, 2017.
Williams and Williams Partners Announce Meeting and Record
Dates for Williams Special Meeting
On July 12, 2018, Williams and Williams Partners announced that,
in connection with the previously announced merger transaction
between Williams and Williams Partners (the "Merger"), the
registration statement on Form S-4 (the "Registration Statement")
has been declared "effective" by the U.S. Securities and Exchange
Commission ("SEC"). Following effectiveness of the Registration
Statement, on July 13, 2018, Williams Gas Pipeline Company, LLC,
which owns units representing approximately 73.8 percent of the
outstanding units of Williams Partners, delivered a written consent
approving and adopting the Merger Agreement and the Merger. As a
result, no further action by any unitholder of Williams Partners is
required to adopt the Merger Agreement and the Merger. The closing
of the Merger remains subject to customary closing conditions,
including approval by the Williams stockholders. On July 12, 2018,
Williams announced that it has scheduled a special meeting of
Williams stockholders on Aug. 9, 2018, to vote on the proposed
Merger and related amendment of Williams Amended and Restated
Certificate of Incorporation to increase the number of shares of
Williams common stock.
Williams Companies Inc. Updates Guidance
Williams Partners unitholders interested in updates to financial
guidance, should refer to the second-quarter 2018 earnings news
release issued today by Williams Companies Inc. ("Williams") (NYSE:
WMB).
Williams Partners’ Second-Quarter 2018 Materials to be Posted
Shortly; Q&A Webcast Scheduled for Tomorrow
Williams Partners’ second-quarter 2018 financial results package
will be posted shortly at www.williams.com. The materials will include the
analyst package.
Williams Partners and Williams will host a joint Q&A live
webcast on Thursday, Aug. 2, 2018, at 9:30 a.m. Eastern Time (8:30
a.m. Central Time). A limited number of phone lines will be
available at (877) 260-1479. International callers should dial
(334) 323-0522. The conference ID is 1766230. The link to the
webcast, as well as replays of the webcast, will be available for
at least 90 days following the event at www.williams.com.
Form 10-Q
The partnership plans to file its second-quarter 2018 Form 10-Q
with the Securities and Exchange Commission (SEC) this week. Once
filed, the document will be available on both the SEC and Williams
Partners websites.
Definitions of Non-GAAP Measures
This news release and accompanying materials may include certain
financial measures – Adjusted EBITDA, distributable cash flow and
cash distribution 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 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 these measures provide investors meaningful
insight into results from ongoing operations.
We define distributable cash flow as Adjusted EBITDA less
maintenance capital expenditures, cash portion of net interest
expense, income attributable to noncontrolling interests and cash
income taxes, plus WPZ restricted stock unit non-cash compensation
expense 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 distributed (cash distribution coverage ratio). This
measure reflects the amount of distributable cash flow relative to
our cash distribution. We have also provided this ratio using the
most directly comparable GAAP measure, net income (loss).
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 the Partnership's assets and the cash that the
business is generating.
Neither Adjusted EBITDA 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.
About Williams Partners
Williams Partners is an industry-leading, large-cap natural gas
infrastructure master limited partnership with a strong growth
outlook and major positions in key U.S. supply basins. Williams
Partners has operations across the natural gas value chain
including gathering, processing and interstate transportation of
natural gas and natural gas liquids. Williams Partners owns and
operates more than 33,000 miles of pipelines system wide –
including the nation’s largest volume and fastest growing pipeline
– providing natural gas for clean-power generation, heating and
industrial use. Williams Partners’ operations touch approximately
30 percent of U.S. natural gas. Tulsa, Okla.-based Williams (NYSE:
WMB), a premier provider of large-scale U.S. natural gas
infrastructure, owns approximately 74 percent of Williams
Partners.
Forward-Looking Statements
The reports, filings, and other public announcements of Williams
Partners L.P. (WPZ) 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 (Exchange Act). 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.
All statements, other than statements of historical facts,
included herein 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:
- The closing and expected timing of, and
anticipated financial results following, the merger of Williams'
wholly owned subsidiary, SCMS LLC, with and into us (WPZ
Merger);
- Levels of cash distributions with
respect to limited partner interests;
- Our and our affiliates’ future credit
ratings;
- 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 herein.
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:
- Satisfaction of the conditions to the
completion of the WPZ Merger, including receipt of the Williams
stockholder approval, and our ability to close the WPZ Merger;
- Whether we will produce sufficient cash
flows to provide expected levels of cash distributions;
- Whether we elect to pay expected levels
of cash distributions;
- Whether we will be able to effectively
execute our financing plan;
- Availability of supplies, market
demand, and volatility of prices;
- 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);
- The strength and financial resources of
our competitors and the effects of competition;
- Whether we are able to successfully
identify, evaluate, and timely execute investment
opportunities;
- Our ability to successfully expand our
facilities and operations;
- Development and rate of adoption of
alternative energy sources;
- The impact of operational and
developmental hazards and unforeseen interruptions;
- The impact of existing and future laws
(including, but not limited to, the Tax Cuts and Jobs Act of 2017),
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 costs for defined benefit pension
plans and other postretirement benefit plans sponsored by our
affiliates;
- Changes in maintenance and construction
costs;
- Changes in the current geopolitical
situation;
- Our exposure to the credit risk of our
customers and counterparties;
- 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;
- The amount of cash distributions from
and capital requirements of our investments and joint ventures in
which we participate;
- Risks associated with weather and
natural phenomena, including climate conditions and physical damage
to our facilities;
- Acts of terrorism, including
cybersecurity threats, and related disruptions;
- Additional risks described in our
filings with the Securities and Exchange Commission (SEC).
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 herein. 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.
Limited partner units are inherently different from the capital
stock of a corporation, although many of the business risks to
which we are subject are similar to those that would be faced by a
corporation engaged in a similar business. You should carefully
consider the risk factors discussed above in addition to the other
information contained herein. If any of such risks were actually to
occur, our business, results of operations, and financial condition
could be materially adversely affected. In that case, we might not
be able to pay distributions on our common units, the trading price
of our common units could decline, and unitholders could lose all
or part of their investment.
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. 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 on February 22, 2018 and in Part II, Item 1A. Risk Factors
in our Quarterly Reports on Form 10-Q.
Williams Partners L.P. Reconciliation of Non-GAAP
Measures (UNAUDITED) 2017 2018
(Dollars in millions, except coverage ratios) 1st Qtr
2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr
2nd Qtr Year
Williams Partners L.P.
Reconciliation of "Net Income (Loss)"
to "Modified EBITDA", Non-GAAP "Adjusted EBITDA" and "Distributable
cash flow" Net income (loss) $ 660 $ 348 $ 284 $
(317 ) $ 975 $ 384 $ 449 $ 833
Provision (benefit) for income taxes 3 1 (1 ) 3 6 — — — Interest
expense 214 205 202 201 822 209 211 420 Equity (earnings) losses
(107 ) (125 ) (115 ) (87 ) (434 ) (82 ) (92 ) (174 ) Other
investing (income) loss - net (271 ) (2 ) (4 ) (4 ) (281 ) (4 ) (67
) (71 ) Proportional Modified EBITDA of equity-method investments
194 215 202 184 795 169 178 347 Depreciation and amortization
expenses 433 423 424 420 1,700 423 426 849 Accretion expense
associated with asset retirement obligations for nonregulated
operations 6 11 8
8 33 8 10
18 Modified EBITDA 1,132 1,076 1,000 408 3,616 1,107 1,115
2,222 Adjustments Estimated minimum volume commitments 15 15 18 (48
) — — — — Severance and related costs 9 4 5 4 22 — — — Settlement
charge from pension early payout program — — — 35 35 — — —
Regulatory adjustments resulting from Tax Reform — — — 713 713 4
(20 ) (16 ) Share of regulatory charges resulting from Tax Reform
for equity-method investments — — — 11 11 2 — 2 ACMP Merger and
transition costs — 4 3 4 11 — — — Constitution Pipeline project
development costs 2 6 4 4 16 2 1 3 Share of impairment at
equity-method investment — — 1 — 1 — — — Geismar Incident
adjustment (9 ) 2 8 (1 ) — — — — Gain on sale of Geismar Interest —
— (1,095 ) — (1,095 ) — — — 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 — — — (Gain)
loss on asset retirement — — (5 ) 5 — — — — 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 — 7 Gain on sale of RGP Splitter — (12 ) —
— (12 ) — — — Expenses associated with Financial Repositioning — 2
— — 2 — — — Expenses associated with strategic asset monetizations
1 4 — — 5 — — — WPZ Merger costs — —
— — — —
1 1 Total EBITDA adjustments (15
) 28 101 742
856 15 (18 ) (3 ) Adjusted
EBITDA 1,117 1,104 1,101 1,150 4,472 1,122 1,097 2,219
Maintenance capital expenditures (1) (53 ) (100 ) (136 ) (154 )
(443 ) (100 ) (152 ) (252 ) Interest expense - net (2) (224 ) (216
) (207 ) (208 ) (855 ) (212 ) (215 ) (427 ) Cash taxes (5 ) (1 ) (4
) (2 ) (12 ) (1 ) (1 ) (2 ) Income attributable to noncontrolling
interests (3) (27 ) (32 ) (27 ) (27 ) (113 ) (25 ) (24 ) (49 ) WPZ
restricted stock unit non-cash compensation 2 1 1 1 5 — — —
Amortization of deferred revenue associated with certain 2016
contract restructurings (4) (58 ) (58 )
(59 ) (58 ) (233 ) — — —
Distributable cash flow attributable to Partnership
Operations 752 698 669
702 2,821 784 705
1,489 Total cash distributed (5) $ 567
$ 574 $ 574 $ 574 $ 2,289 $ 588 $ 603 $ 1,191
Coverage
ratios: Distributable cash flow attributable to partnership
operations divided by Total cash distributed 1.33
1.22 1.17 1.22
1.23 1.33 1.17 1.25
Net income (loss) divided by Total cash distributed
1.16 0.61 0.49
(0.55 ) 0.43 0.65 0.74
0.70 (1) Includes proportionate share of maintenance
capital expenditures of equity investments. (2) Includes
proportionate share of interest expense of equity investments. (3)
Excludes allocable share of certain EBITDA adjustments. (4)
Beginning first quarter 2018, as a result of the extended deferred
revenue amortization period under the new GAAP revenue standard, we
have discontinued the adjustment associated with these 2016
contract restructuring payments. The adjustments would have been
$32 million and $31 million for the first and second quarters of
2018, respectively. (5) Cash distributions for the first quarter of
2017 have been decreased by $6 million to reflect the amount paid
by WMB to WPZ pursuant to the January 2017 Common Unit Purchase
Agreement.
Williams Partners L.P. Reconciliation
of “Modified EBITDA” to Non-GAAP “Adjusted EBITDA” (UNAUDITED)
2017 2018 (Dollars in millions) 1st Qtr
2nd Qtr 3rd Qtr 4th Qtr Year 1st
Qtr 2nd Qtr Year
Modified EBITDA:
Northeast G&P $ 226 $ 247 $ 115 $ 231 $
819 $ 250 $ 255 $ 505 Atlantic-Gulf 450 454 430 (96 ) 1,238 451 475
926 West 385 356 (615 ) 286 412 413 389 802 NGL & Petchem
Services 51 30 1,084 (4 ) 1,161 — — — Other 20
(11 ) (14 ) (9 )
(14 ) (7 ) (4 ) (11 )
Total
Modified EBITDA $ 1,132 $
1,076 $ 1,000
$ 408 $ 3,616
$ 1,107 $ 1,115
$ 2,222 Adjustments:
Northeast
G&P
Share of impairment at equity-method investments $ — $ — $ 1 $ — $
1 $ — $ — $ — Impairment of certain assets — — 121 — 121 — — — Ad
valorem obligation timing adjustment — — 7 — 7 — — — Settlement
charge from pension early payout program — — — 7 7 — — —
Organizational realignment-related costs 1
1 2 —
4 — —
—
Total Northeast
G&P adjustments
1 1 131 7 140 — — —
Atlantic-Gulf Constitution
Pipeline project development costs 2 6 4 4 16 2 1 3 Settlement
charge from pension early payout program — — — 15 15 — — —
Regulatory adjustments resulting from Tax Reform — — — 493 493 11
(20 ) (9 ) Share of regulatory charges resulting from Tax Reform
for equity-method investments — — — 11 11 2 — 2 Organizational
realignment-related costs 1 2 2 1 6 — — — (Gain) loss on asset
retirement — — (5
) 5 — —
— — Total Atlantic-Gulf
adjustments 3 8 1 529 541 15 (19 ) (4 )
West
Estimated minimum volume commitments 15 15 18 (48 ) — — — —
Impairment of certain assets — — 1,021 9 1,030 — — — Settlement
charge from pension early payout program — — — 13 13 — — —
Regulatory adjustments resulting from Tax Reform — — — 220 220 (7 )
— (7 ) Organizational realignment-related costs 2 3 2 1 8 — — —
Gains from contract settlements and terminations (13 )
(2 ) — —
(15 ) — —
— Total West adjustments 4 16 1,041 195 1,256 (7 ) —
(7 )
NGL & Petchem
Services
(Gain) loss related to Canada disposition (3 ) (1 ) 4 4 4 — — —
Expenses associated with strategic asset monetizations 1 4 — — 5 —
— — Geismar Incident adjustments (9 ) 2 8 (1 ) — — — — Gain on sale
of Geismar Interest — — (1,095 ) — (1,095 ) — — — Gain on sale of
RGP Splitter — (12 ) — — (12 ) — — — Accrual for loss contingency
9 — —
— 9 —
— — Total NGL &
Petchem Services adjustments (2 ) (7 ) (1,083 ) 3 (1,089 ) — — —
Other
Severance and related costs 9 4 5 4 22 — — — ACMP Merger and
transition costs — 4 3 4 11 — — — Expenses associated with
Financial Repositioning — 2 — — 2 — — — (Gain) loss on early
retirement of debt (30 ) — 3 — (27 ) 7 — 7 WPZ Merger costs
— — —
— — —
1 1 Total Other adjustments (21
) 10 11 8 8 7 1 8
Total
Adjustments $ (15 ) $
28 $ 101 $
742 $ 856 $
15 $ (18 )
$ (3 ) Adjusted EBITDA:
Northeast G&P $ 227 $ 248 $ 246 $ 238 $ 959 $ 250 $ 255 $ 505
Atlantic-Gulf 453 462 431 433 1,779 466 456 922 West 389 372 426
481 1,668 406 389 795 NGL & Petchem Services 49 23 1 (1 ) 72 —
— — Other (1 ) (1 ) (3 )
(1 ) (6 ) — (3 )
(3 )
Total Adjusted EBITDA $
1,117 $ 1,104
$ 1,101 $ 1,150
$ 4,472 $ 1,122
$ 1,097 $ 2,219
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version on businesswire.com: https://www.businesswire.com/news/home/20180801005786/en/
Williams Partners L.P.Media Contact:Keith Isbell,
918-573-7308orInvestor Contacts:John Porter,
918-573-0797orPaul Schroedter, 918-573-9673
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