Williams Cos. (NYSE: WMB) reported Q1 EPS of $0.35, $0.06 better than the analyst estimate of $0.29. Revenue for the quarter came in at $2.61 billion versus the consensus estimate of $1.97 billion.

Results exceed expectations across all key metrics

• Net income of $425 million, or $0.35 per diluted share (EPS)
• Adjusted EPS of $0.35 per diluted share – up 35% from 1Q 2020
• Cash flow from operations (CFFO) of $915 million – up $128 million or 16% from 1Q 2020
• Available funds from operations (AFFO) of $1.029 billion – up $109 million or 12% from 1Q 2020
• Adjusted EBITDA of $1.415 billion – up $153 million or 12% from 1Q 2020; up 6% excluding favorable winter storm effects
• Record gathering volumes of 13.6 Bcf/d; record contracted transmission capacity of 22.8 Bcf/d
• Debt-to-Adjusted EBITDA at quarter end: 4.2x
• Guidance midpoints for Adjusted EBITDA and AFFO increase by $100 million
• Dividend coverage ratio is 2.07x (AFFO basis)
• CEO Perspective

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

“Our natural gas business strategy continues to deliver consistently strong cash flow with first-quarter Adjusted EBITDA up 12 percent from last year, driven in part by record gathering volumes particularly in the Northeast. Severe winter weather in February boosted marketing margins and upstream sales from unusually high prices, but even excluding these weather effects, our Adjusted EBITDA was up 6 percent, underscoring the stability of our earnings regardless of external factors.”

“We continued our pace of execution in the first quarter, placing Southeastern Trail into full service in early January and progressing on Transco’s Leidy South project to bring additional gas from Appalachia to growing demand centers along the Atlantic Seaboard by next winter. We also filed our FERC application for the Regional Energy Access pipeline expansion, a low-impact project being designed in a manner that is adaptable to future renewable energy sources like clean hydrogen and RNG blending.”

Armstrong added, “As one of the nation’s largest clean energy infrastructure providers, we have a huge opportunity to leverage our natural gas-focused business as the world moves to a low-carbon future, while helping customers and the United States meet climate goals. We believe clean, affordable and reliable natural gas is an important component of today’s fuel mix and should be prioritized as one of the most important tools to aggressively displace more carbon-intensive fuels around the world.”

2021 Financial Guidance

The company now expects 2021 Adjusted EBITDA between $5.2 billion and $5.4 billion and Available Funds from Operations between $3.7 billion and $3.9 billion, both a $100 million midpoint increase from guidance originally issued in February 2021. As well, the leverage ratio midpoint has been updated to ~4.2x versus ~4.25x prior for year-end 2021. The company is keeping intact 2021 growth capex guidance between $1 billion to $1.2 billion. Importantly, Williams expects to generate positive free cash flow (after capital expenditures and dividends), allowing it to retain financial flexibility.

For earnings history and earnings-related data on Williams Cos. (WMB) click here.