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Williams Reports Strong Second-Quarter Results

August 2, 2023 4:15 PM

TULSA, Okla.--(BUSINESS WIRE)-- Williams (NYSE: WMB) today announced its unaudited financial results for the three and six months ended June 30, 2023.

Robust growth continues across key financial metrics driven by base business

Recent progress on projects in execution to deliver additional earnings growth in 2023 and beyond

CEO Perspective

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

“Our natural gas-centric strategy continues to prove its resiliency in a low gas price environment with second-quarter Adjusted EBITDA up 8 percent over the same period last year driven by strong earnings growth across our base business. In addition to record gathering volumes, we also benefited from our first full quarter of contributions from the MountainWest Pipeline transmission and storage assets, which our teams have quickly integrated into our large-scale platforms in the western U.S.

“On the project execution front, we are in full construction on the Regional Energy Access expansion, and expect to bring half of the project in service ahead of schedule this winter to begin moving additional Northeast gas to nearby markets. We are generating value from our 2022 acquisitions with several growth projects underway, including MountainWest’s Overthrust Westbound Expansion. Elsewhere across our footprint, we are progressing on an impressive list of transmission and deepwater Gulf of Mexico projects, which we expect to drive additional growth toward the end of 2024.”

Armstrong added, “As we continue expanding to serve growing markets, we’re also investing in a multi-year modernization program of our large-scale transmission systems, which will reduce emissions and increase earnings. Our recently issued Sustainability Report details this progress as well as ongoing efforts to support communities, environmental stewardship and workforce development and diversity.”

Williams Summary Financial Information

2Q

Year to Date

Amounts in millions, except ratios and per-share amounts. Per share amounts are reported on a diluted basis. Net income amounts are from continuing operations attributable to The Williams Companies, Inc. available to common stockholders.

2023

2022

2023

2022

GAAP Measures

Net Income

$547

$400

$1,473

$779

Net Income Per Share

$0.45

$0.33

$1.20

$0.64

Cash Flow From Operations

$1,377

$1,098

$2,891

$2,180

Non-GAAP Measures (1)

Adjusted EBITDA

$1,611

$1,496

$3,406

$3,007

Adjusted Net Income

$515

$484

$1,199

$983

Adjusted Earnings Per Share

$0.42

$0.40

$0.98

$0.80

Available Funds from Operations

$1,215

$1,130

$2,660

$2,320

Dividend Coverage Ratio

2.23x

2.19x

2.44x

2.24x

Other

Debt-to-Adjusted EBITDA at Quarter End (2)

3.50x

3.82x

Capital Investments (3) (4)

$715

$429

$1,240

$745

(1) Schedules reconciling Adjusted Net Income, Adjusted EBITDA, Available Funds from Operations and Dividend Coverage Ratio (non-GAAP measures) to the most comparable GAAP measure are available at www.williams.com and as an attachment to this news release.

(2) Does not represent leverage ratios measured for WMB credit agreement compliance or leverage ratios as calculated by the major credit ratings agencies. Debt is net of cash on hand, and Adjusted EBITDA reflects the sum of the last four quarters.

(3) Capital Investments includes increases to property, plant, and equipment (growth & maintenance capital),purchases of and contributions to equity-method investments and purchases of other long-term investments.

(4) Year-to-date 2023 capital excludes $1.053 billion acquisition of MountainWest Pipeline Holding company, which closed February 14, 2023. Second quarter 2022 and full-year 2022 capital excludes $933 million for purchase of the Trace Midstream Haynesville gathering assets, which closed April 29, 2022.

GAAP Measures

Second-quarter 2023 net income increased by $147 million compared to the prior year reflecting the benefit of higher service revenues driven by contributions from recent acquisitions and increased volumes and rates in the Northeast G&P segment, as well as a favorable change of $324 million in net unrealized gains/losses on commodity derivatives. These improvements were partially offset by lower results from our upstream business driven by lower prices, lower commodity marketing margins, and higher operating and administrative expenses, including the impact from recent acquisitions. The tax provision increased primarily due to higher pretax income and the absence of $134 million associated with the release of valuation allowances on deferred income tax assets and federal income tax settlements recorded in the prior year. The second-quarter and year-to-date 2023 periods also reported a loss from discontinued operations associated with an adverse legal ruling involving former refinery operations.

For year-to-date 2023, net income increased $694 million compared to the prior year reflecting a favorable change of $774 million in net unrealized gains/losses on commodity derivatives. Other drivers of the year-to-date increase are similar to those described for the quarterly comparison, except that improved commodity marketing margins more than offset lower NGL processing margins for the year-to-date period.

Cash flow from operations for the second-quarter and year-to-date 2023 periods increased compared to 2022 primarily due to favorable net changes in working capital. The year-to-date improvement also reflected higher operating results exclusive of non-cash items.

Non-GAAP Measures

Second-quarter 2023 Adjusted EBITDA increased by $115 million over the prior year, driven by the previously described higher service revenues, partially offset by lower commodity marketing margins, reduced upstream results, and higher operating and administrative expenses. Year-to-date 2023 Adjusted EBITDA increased by $399 million over the prior year, driven by similar factors, except that commodity margins were overall improved.

Second-quarter 2023 Adjusted Net Income improved by $31 million over the prior year, driven by the previously described impacts to net income, adjusted primarily to remove the effects of net unrealized gains/losses on commodity derivatives, amortization of certain assets from the Sequent acquisition, and favorable income tax benefits. Year-to-date Adjusted Net Income increased by $216 million over the prior year for similar reasons.

Second-quarter 2023 Available Funds From Operations (AFFO) increased by $85 million compared to the prior year primarily due to higher results from continuing operations exclusive of non-cash items. Year-to-date 2023 AFFO increased by $340 million also primarily reflecting higher results from continuing operations exclusive of non-cash items.

Second Quarter

Year to Date

Amounts in millions

Modified EBITDA

Adjusted EBITDA

Modified EBITDA

Adjusted EBITDA

2Q 2023

2Q 2022

Change

2Q 2023

2Q 2022

Change

2023

2022

Change

2023

2022

Change

Transmission & Gulf of Mexico

$731

$652

$79

$748

$652

$96

$1,446

$1,349

$97

$1,476

$1,349

$127

Northeast G&P

515

450

65

515

450

65

985

868

117

985

868

117

West

312

288

24

312

296

16

616

548

68

598

556

42

Gas & NGL Marketing Services

68

(282

)

350

(16

)

6

(22

)

635

(269

)

904

215

71

144

Other

41

139

(98

)

52

92

(40

)

115

144

(29

)

132

163

(31

)

Total

$1,667

$1,247

$420

$1,611

$1,496

$115

$3,797

$2,640

$1,157

$3,406

$3,007

$399

Note: Williams uses Modified EBITDA for its segment reporting. Definitions of Modified EBITDA and Adjusted EBITDA and schedules reconciling to net income are included in this news release.

Transmission & Gulf of Mexico

Second-quarter and year-to-date 2023 Modified and Adjusted EBITDA improved compared to the prior year driven by the MountainWest and NorTex Midstream acquisitions, as well as higher service revenues. Modified EBITDA for 2023 was further impacted by one-time MountainWest acquisition and transition costs, which are excluded from Adjusted EBITDA.

Northeast G&P

Second-quarter and year-to-date 2023 Modified and Adjusted EBITDA increased over the prior year driven by increased gathering rates and volumes, partially offset by lower rates at Laurel Mountain Midstream and Bradford joint ventures.

West

Second-quarter and year-to-date 2023 Modified and Adjusted EBITDA increased compared to the prior year benefiting from higher service revenues reflecting realized gains on natural gas hedges and higher Haynesville volumes, partially offset by lower NYMEX-based rates in the Barnett, as well increased JV EBITDA. The year-to-date period improvement also included contributions from Trace Midstream acquired in April 2022 and lower processing margins due to a short-term gas price spike at Opal early in the year and severe weather impacts.

Gas & NGL Marketing Services

Second-quarter 2023 Modified EBITDA improved from the prior year primarily reflecting a $382 million net favorable change in unrealized gains/losses on commodity derivatives. Year-to-date 2023 Modified EBITDA improved from the prior year primarily reflecting higher commodity marketing margins and a $772 million net favorable change in unrealized gains/losses on commodity derivatives. The unrealized gains/losses on commodity derivatives are excluded from Adjusted EBITDA.

Other

Second-quarter 2023 Modified EBITDA decreased compared to the prior year primarily reflecting a $58 million net unfavorable change in unrealized gains/losses on commodity derivatives, which is excluded from Adjusted EBITDA. The second-quarter and year-to-date periods were also impacted by lower results from our upstream business driven by lower prices.

Business Segment Results & Form 10-Q

Williams' operations are comprised of the following reportable segments: Transmission & Gulf of Mexico, Northeast G&P, West and Gas & NGL Marketing Services, as well as Other. For more information, see the company's second-quarter 2023 Form 10-Q.

2023 Financial Guidance

The company continues to expect 2023 Adjusted EBITDA between $6.4 billion and $6.8 billion with 2023 growth capex between $1.6 billion to $1.9 billion. Importantly, Williams anticipates a leverage ratio midpoint of 3.65x, which will allow it to retain financial flexibility. The dividend was increased by 5.3% on an annualized basis to $1.79 in 2023 from $1.70 in 2022.

Williams' Second-Quarter 2023 Materials to be Posted Shortly; Q&A Webcast Scheduled for Tomorrow

Williams' second-quarter 2023 earnings presentation will be posted at www.williams.com. The company’s second-quarter 2023 earnings conference call and webcast with analysts and investors is scheduled for Thursday, Aug. 3, at 9:30 a.m. Eastern Time (8:30 a.m. Central Time). Participants who wish to join the call by phone must register using the following link: https://conferencingportals.com/event/MTgNWtxQ

A webcast link to the conference call will be provided on Williams’ Investor Relations website. A replay of the webcast will be available on the website for at least 90 days following the event.

About Williams

As the world demands reliable, low-cost, low-carbon energy, Williams (NYSE: WMB) will be there with the best transport, storage and delivery solutions to reliably fuel the clean energy economy. Headquartered in Tulsa, Oklahoma, Williams is an industry-leading, investment grade C-Corp with operations across the natural gas value chain including gathering, processing, interstate transportation, storage, wholesale marketing and trading of natural gas and natural gas liquids. With major positions in top U.S. supply basins, Williams connects the best supplies with the growing demand for clean energy. Williams owns and operates more than 33,000 miles of pipelines system wide – including Transco, the nation’s largest volume pipeline – and handles approximately one third of the natural gas in the United States that is used every day for clean-power generation, heating and industrial use. Learn how the company is leveraging its nationwide footprint to incorporate clean hydrogen, NextGen Gas and other innovations at www.williams.com.

The Williams Companies, Inc.

Consolidated Statement of Income

(Unaudited)

Three Months Ended
June 30,

Six Months Ended
June 30,

2023

2022

2023

2022

(Millions, except per-share amounts)

Revenues:

Service revenues

$

1,748

$

1,606

$

3,442

$

3,143

Service revenues – commodity consideration

27

86

63

163

Product sales

593

1,111

1,438

2,215

Net gain (loss) on commodity derivatives

115

(313

)

621

(507

)

Total revenues

2,483

2,490

5,564

5,014

Costs and expenses:

Product costs

421

857

974

1,660

Net processing commodity expenses

44

40

98

70

Operating and maintenance expenses

481

465

944

859

Depreciation and amortization expenses

515

506

1,021

1,004

Selling, general, and administrative expenses

161

160

337

314

Other (income) expense – net

(9

)

(10

)

(40

)

(19

)

Total costs and expenses

1,613

2,018

3,334

3,888

Operating income (loss)

870

472

2,230

1,126

Equity earnings (losses)

160

163

307

299

Other investing income (loss) – net

13

2

21

3

Interest incurred

(319

)

(286

)

(623

)

(575

)

Interest capitalized

13

5

23

8

Other income (expense) – net

19

6

39

11

Income (loss) before income taxes

756

362

1,997

872

Less: Provision (benefit) for income taxes

175

(45

)

459

73

Income (loss) from continuing operations

581

407

1,538

799

Income (loss) from discontinued operations

(87

)

—

(87

)

—

Net income (loss)

494

407

1,451

799

Less: Net income (loss) attributable to noncontrolling interests

34

7

64

19

Net income (loss) attributable to The Williams Companies, Inc

460

400

1,387

780

Less: Preferred stock dividends

—

—

1

1

Net income (loss) available to common stockholders

$

460

$

400

$

1,386

$

779

Amounts attributable to The Williams Companies, Inc. available to common stockholders:.

Income (loss) from continuing operations

$

547

$

400

$

1,473

$

779

Income (loss) from discontinued operations

(87

)

—

(87

)

—

Net income (loss) available to common stockholders

$

460

$

400

$

1,386

$

779

Basic earnings (loss) per common share:

Income (loss) from continuing operations

$

.45

$

.33

$

1.21

$

.64

Income (loss) from discontinued operations

(.07

)

—

(.07

)

—

Net income (loss) available to common stockholders

$

.38

$

.33

$

1.14

$

.64

Weighted-average shares (thousands)

1,217,673

1,218,678

1,218,564

1,217,814

Diluted earnings (loss) per common share:

Income (loss) from continuing operations

$

.45

$

.33

$

1.20

$

.64

Income (loss) from discontinued operations

(.07

)

—

(.07

)

—

Net income (loss) available to common stockholders

$

.38

$

.33

$

1.13

$

.64

Weighted-average shares (thousands)

1,219,915

1,222,694

1,223,429

1,221,991

The Williams Companies, Inc.

Consolidated Balance Sheet

(Unaudited)

June 30,
2023

December 31,
2022

(Millions, except per-share amounts)

ASSETS

Current assets:

Cash and cash equivalents

$

551

$

152

Trade accounts and other receivables (net of allowance of $6 at June 30, 2023 and December 31, 2022)

1,362

2,723

Inventories

259

320

Derivative assets

233

323

Other current assets and deferred charges

234

279

Total current assets

2,639

3,797

Investments

5,046

5,065

Property, plant, and equipment

50,240

47,057

Accumulated depreciation and amortization

(17,894

)

(16,168

)

Property, plant, and equipment – net.

32,346

30,889

Intangible assets – net of accumulated amortization

7,573

7,363

Regulatory assets, deferred charges, and other

1,421

1,319

Total assets

$

49,025

$

48,433

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

1,146

$

2,327

Derivative liabilities

143

316

Accrued and other current liabilities

1,218

1,270

Commercial paper

—

350

Long-term debt due within one year

2,877

627

Total current liabilities

5,384

4,890

Long-term debt

21,532

21,927

Deferred income tax liabilities

3,325

2,887

Regulatory liabilities, deferred income, and other

4,575

4,684

Contingent liabilities and commitments

Equity:

Stockholders’ equity:

Preferred stock ($1 par value; 30 million shares authorized at June 30, 2023 and December 31, 2022; 35,000 shares issued at June 30, 2023 and December 31, 2022)

35

35

Common stock ($1 par value; 1,470 million shares authorized at June 30, 2023 and December 31, 2022; 1,256 million shares issued at June 30, 2023 and 1,253 million shares issued at December 31, 2022)

1,256

1,253

Capital in excess of par value

24,538

24,542

Retained deficit

(12,982

)

(13,271

)

Accumulated other comprehensive income (loss).

12

(24

)

Treasury stock, at cost (39 million shares at June 30, 2023 and 35 million shares at December 31, 2022 of common stock)

(1,180

)

(1,050

)

Total stockholders’ equity

11,679

11,485

Noncontrolling interests in consolidated subsidiaries

2,530

2,560

Total equity

14,209

14,045

Total liabilities and equity

$

49,025

$

48,433

The Williams Companies, Inc.

Consolidated Statement of Cash Flows

(Unaudited)

Six Months Ended
June 30,

2023

2022

(Millions)

OPERATING ACTIVITIES:

Net income (loss)

$

1,451

$

799

Adjustments to reconcile to net cash provided (used) by operating activities:

Depreciation and amortization

1,021

1,004

Provision (benefit) for deferred income taxes

427

90

Equity (earnings) losses

(307

)

(299

)

Distributions from equity-method investees

418

414

Net unrealized (gain) loss from derivative instruments

(410

)

364

Inventory write-downs

23

12

Amortization of stock-based awards

40

36

Cash provided (used) by changes in current assets and liabilities:

Accounts receivable

1,423

(797

)

Inventories

41

(11

)

Other current assets and deferred charges

24

(15

)

Accounts payable

(1,220

)

690

Accrued and other current liabilities

(72

)

(24

)

Changes in current and noncurrent derivative assets and liabilities

119

49

Other, including changes in noncurrent assets and liabilities

(87

)

(132

)

Net cash provided (used) by operating activities

2,891

2,180

FINANCING ACTIVITIES:

Proceeds from (payments of) commercial paper – net

(352

)

1,037

Proceeds from long-term debt

1,503

5

Payments of long-term debt

(14

)

(2,012

)

Proceeds from issuance of common stock

4

48

Purchases of treasury stock

(130

)

—

Common dividends paid

(1,091

)

(1,035

)

Dividends and distributions paid to noncontrolling interests

(112

)

(95

)

Contributions from noncontrolling interests

18

8

Payments for debt issuance costs

(13

)

—

Other – net

(17

)

(31

)

Net cash provided (used) by financing activities

(204

)

(2,075

)

INVESTING ACTIVITIES:

Property, plant, and equipment:

Capital expenditures (1)

(1,155

)

(606

)

Dispositions – net

(21

)

(11

)

Contributions in aid of construction

18

6

Purchases of businesses, net of cash acquired

(1,053

)

(933

)

Purchases of and contributions to equity-method investments

(69

)

(100

)

Other – net

(8

)

(8

)

Net cash provided (used) by investing activities

(2,288

)

(1,652

)

Increase (decrease) in cash and cash equivalents

399

(1,547

)

Cash and cash equivalents at beginning of year

152

1,680

Cash and cash equivalents at end of period

$

551

$

133

_____________

(1) Increases to property, plant, and equipment

$

(1,168

)

$

(642

)

Changes in related accounts payable and accrued liabilities

13

36

Capital expenditures

$

(1,155

)

$

(606

)

Transmission & Gulf of Mexico

(UNAUDITED)

2022

2023

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

1st Qtr

2nd Qtr

Year

Regulated interstate natural gas transportation, storage, and other revenues (1)

$

730

$

717

$

734

$

758

$

2,939

$

774

$

786

$

1,560

Gathering, processing, storage and transportation revenues

82

84

99

100

365

100

104

204

Other fee revenues (1)

5

5

4

7

21

6

8

14

Commodity margins

15

11

10

7

43

10

8

18

Net unrealized gain (loss) from derivative instruments

—

—

1

(1

)

—

—

—

—

Operating and administrative costs (1)

(202

)

(227

)

(238

)

(239

)

(906

)

(254

)

(254

)

(508

)

Other segment income (expenses) - net (1)

19

17

(22

)

5

19

26

31

57

Proportional Modified EBITDA of equity-method investments

48

45

50

50

193

53

48

101

Modified EBITDA

697

652

638

687

2,674

715

731

1,446

Adjustments

—

—

33

13

46

13

17

30

Adjusted EBITDA

$

697

$

652

$

671

$

700

$

2,720

$

728

$

748

$

1,476

Statistics for Operated Assets

Natural Gas Transmission (2)

Transcontinental Gas Pipe Line

Avg. daily transportation volumes (MMdth)

15.0

13.5

14.7

14.2

14.4

14.3

13.2

13.8

Avg. daily firm reserved capacity (MMdth)

19.3

19.1

19.2

19.3

19.2

19.5

19.4

19.4

Northwest Pipeline LLC

Avg. daily transportation volumes (MMdth)

2.8

2.1

2.0

2.9

2.5

3.1

2.3

2.7

Avg. daily firm reserved capacity (MMdth)

3.8

3.8

3.8

3.8

3.8

3.8

3.8

3.8

MountainWest (3)

Avg. daily transportation volumes (MMdth)

—

—

—

—

—

4.2

3.2

3.5

Avg. daily firm reserved capacity (MMdth)

—

—

—

—

—

7.8

7.5

7.6

Gulfstream - Non-consolidated

Avg. daily transportation volumes (MMdth)

0.9

1.3

1.4

1.1

1.3

1.0

1.2

1.1

Avg. daily firm reserved capacity (MMdth)

1.3

1.3

1.4

1.4

1.4

1.4

1.4

1.4

Gathering, Processing, and Crude Oil Transportation

Consolidated (4)

Gathering volumes (Bcf/d)

0.30

0.28

0.29

0.28

0.29

0.28

0.23

0.25

Plant inlet natural gas volumes (Bcf/d)

0.48

0.46

0.49

0.46

0.47

0.43

0.40

0.41

NGL production (Mbbls/d)

31

31

26

26

28

28

24

26

NGL equity sales (Mbbls/d)

7

7

4

5

6

7

5

6

Crude oil transportation volumes (Mbbls/d)

110

124

125

118

119

119

111

115

Non-consolidated (5)

Gathering volumes (Bcf/d)

0.39

0.37

0.41

0.42

0.40

0.36

0.30

0.33

Plant inlet natural gas volumes (Bcf/d)

0.38

0.37

0.41

0.42

0.40

0.36

0.30

0.33

NGL production (Mbbls/d)

28

26

29

29

28

28

21

24

NGL equity sales (Mbbls/d)

8

6

7

10

8

8

3

6

(1) Excludes certain amounts associated with revenues and operating costs for tracked or reimbursable charges.

(2) Tbtu converted to MMdth at one trillion British thermal units = one million dekatherms.

(3) Includes 100% of the volumes associated with the MountainWest Acquisition transmission assets after the purchase on February 14, 2023, including 100% of the volumes associated with the operated equity-method investment White River Hub, LLC. Average volumes were calculated over the period owned.

(4) Excludes volumes associated with equity-method investments that are not consolidated in our results.

(5) Includes 100% of the volumes associated with operated equity-method investments.

Northeast G&P

(UNAUDITED)

2022

2023

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

1st Qtr

2nd Qtr

Year

Gathering, processing, transportation, and fractionation revenues

$

323

$

350

$

354

$

368

$

1,395

$

391

$

431

$

822

Other fee revenues (1)

27

27

27

46

127

32

27

59

Commodity margins

6

1

3

—

10

5

(1

)

4

Operating and administrative costs (1)

(85

)

(102

)

(101

)

(97

)

(385

)

(101

)

(101

)

(202

)

Other segment income (expenses) - net

(3

)

—

(1

)

(1

)

(5

)

—

—

—

Proportional Modified EBITDA of equity-method investments

150

174

182

148

654

143

159

302

Modified EBITDA

418

450

464

464

1,796

470

515

985

Adjustments

—

—

—

—

—

—

—

—

Adjusted EBITDA

$

418

$

450

$

464

$

464

$

1,796

$

470

$

515

$

985

Statistics for Operated Assets and non-operated Blue Racer Midstream

Gathering and Processing

Consolidated (2)

Gathering volumes (Bcf/d)

4.03

4.19

4.22

4.31

4.19

4.45

4.63

4.54

Plant inlet natural gas volumes (Bcf/d)

1.46

1.70

1.74

1.70

1.65

1.92

1.79

1.85

NGL production (Mbbls/d)

110

118

125

127

120

144

135

140

NGL equity sales (Mbbls/d) (3)

2

1

1

1

1

1

1

1

Non-consolidated (4)

Gathering volumes (Bcf/d)

6.62

6.76

6.58

6.48

6.61

6.97

7.03

7.00

Plant inlet natural gas volumes (Bcf/d)

0.66

0.76

0.66

0.77

0.71

0.77

0.93

0.85

NGL production (Mbbls/d)

50

53

45

56

51

54

64

59

NGL equity sales (Mbbls/d)

4

3

2

2

3

4

5

4

(1) Excludes certain amounts associated with revenues and operating costs for reimbursable charges.

(2) Includes volumes associated with Susquehanna Supply Hub, the Northeast JV, and Utica Supply Hub, all of which are consolidated.

(3) 1st Qtr 2023 volumes have been revised for a correction.

(4) Includes 100% of the volumes associated with operated equity-method investments, including the Laurel Mountain Midstream partnership; and the Bradford Supply Hub and the Marcellus South Supply Hub within the Appalachia Midstream Services partnership. Also, all periods include non-operated Blue Racer Midstream.

West

(UNAUDITED)

2022

2023

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

1st Qtr

2nd Qtr

Year

Net gathering, processing, transportation, storage, and fractionation revenues

$

317

$

360

$

397

$

401

$

1,475

$

382

$

373

$

755

Other fee revenues (1)

6

6

6

5

23

5

7

12

Commodity margins

23

25

27

27

102

(24

)

18

(6

)

Operating and administrative costs (1)

(112

)

(133

)

(128

)

(133

)

(506

)

(115

)

(122

)

(237

)

Other segment income (expenses) - net

(1

)

(1

)

(6

)

(7

)

(15

)

23

(7

)

16

Proportional Modified EBITDA of equity-method investments

27

31

41

33

132

33

43

76

Modified EBITDA

260

288

337

326

1,211

304

312

616

Adjustments

—

8

—

—

8

(18

)

—

(18

)

Adjusted EBITDA

$

260

$

296

$

337

$

326

$

1,219

$

286

$

312

$

598

Statistics for Operated Assets

Gathering and Processing

Consolidated (2)

Gathering volumes (Bcf/d) (3)

3.47

5.14

5.20

5.50

5.19

5.47

5.51

5.49

Plant inlet natural gas volumes (Bcf/d)

1.13

1.14

1.21

1.10

1.15

0.92

1.06

0.99

NGL production (Mbbls/d)

47

49

45

32

43

25

40

33

NGL equity sales (Mbbls/d)

17

18

13

7

14

6

16

11

Non-consolidated (4)

Gathering volumes (Bcf/d)

0.28

0.28

0.29

0.29

0.29

0.32

0.33

0.32

Plant inlet natural gas volumes (Bcf/d)

0.27

0.28

0.29

0.29

0.28

0.32

0.32

0.32

NGL production (Mbbls/d)

31

32

34

32

33

37

38

38

NGL and Crude Oil Transportation volumes (Mbbls/d) (5)

118

144

172

151

146

153

200

177

(1) Excludes certain amounts associated with revenues and operating costs for reimbursable charges.

(2) Excludes volumes associated with equity-method investments that are not consolidated in our results.

(3) Includes 100% of the volumes associated with the Trace Acquisition gathering assets after the purchase on April 29, 2022. Average volumes were calculated over the period owned.

(4) Includes 100% of the volumes associated with operated equity-method investments, including Rocky Mountain Midstream.

(5) Includes 100% of the volumes associated with operated equity-method investments, including Overland Pass Pipeline Company and Rocky Mountain Midstream.

Gas & NGL Marketing Services

(UNAUDITED)

2022

2023

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

1st Qtr

2nd Qtr

Year

Commodity margins

$

100

$

23

$

39

$

161

$

323

$

265

$

(2

)

$

263

Other fee revenues

1

—

1

1

3

1

—

1

Net unrealized gain (loss) from derivative instruments

(57

)

(288

)

5

66

(274

)

333

94

427

Operating and administrative costs

(31

)

(23

)

(24

)

(18

)

(96

)

(32

)

(24

)

(56

)

Other segment income (expenses) - net

—

6

(1

)

(1

)

4

—

—

—

Modified EBITDA

13

(282

)

20

209

(40

)

567

68

635

Adjustments

52

288

18

(60

)

298

(336

)

(84

)

(420

)

Adjusted EBITDA

$

65

$

6

$

38

$

149

$

258

$

231

$

(16

)

$

215

Statistics

Product Sales Volumes

Natural Gas (Bcf/d)

7.96

6.66

7.11

7.05

7.20

7.24

6.56

6.90

NGLs (Mbbls/d)

246

234

267

254

250

234

239

236

Other

(UNAUDITED)

2022

2023

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

1st Qtr

2nd Qtr

Year

Service revenues

$

9

$

7

$

6

$

2

$

24

$

3

$

5

$

8

Net realized product sales

96

142

180

184

602

120

97

217

Net unrealized gain (loss) from derivative instruments

(66

)

47

29

15

25

(6

)

(11

)

(17

)

Operating and administrative costs

(33

)

(57

)

(62

)

(59

)

(211

)

(48

)

(54

)

(102

)

Other segment income (expenses) - net

(1

)

—

(13

)

8

(6

)

5

5

10

Proportional Modified EBITDA of equity-method investments

—

—

—

—

—

—

(1

)

(1

)

Modified EBITDA

5

139

140

150

434

74

41

115

Adjustments

66

(47

)

(13

)

(15

)

(9

)

6

11

17

Adjusted EBITDA

$

71

$

92

$

127

$

135

$

425

$

80

$

52

$

132

Statistics

Net Product Sales Volumes

Natural Gas (Bcf/d)

0.12

0.19

0.27

0.31

0.22

0.26

0.29

0.27

NGLs (Mbbls/d)

7

7

8

7

7

3

6

4

Crude Oil (Mbbls/d)

2

3

2

2

2

1

3

2

Capital Expenditures and Investments

(UNAUDITED)

2022

2023

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

1st Qtr

2nd Qtr

Year

Capital expenditures:

Transmission & Gulf of Mexico

$

125

$

129

$

637

$

358

$

1,249

$

205

$

263

$

468

Northeast G&P

40

30

52

92

214

99

74

173

West

61

82

94

226

463

169

197

366

Other

65

74

58

130

327

72

76

148

Total (1)

$

291

$

315

$

841

$

806

$

2,253

$

545

$

610

$

1,155

Purchases of and contributions to equity-method investments:

Transmission & Gulf of Mexico

$

16

$

26

$

11

$

17

$

70

$

8

$

18

$

26

Northeast G&P

32

18

28

8

86

31

12

43

Other

8

—

1

1

10

—

—

—

Total

$

56

$

44

$

40

$

26

$

166

$

39

$

30

$

69

Summary:

Transmission & Gulf of Mexico

$

141

$

155

$

648

$

375

$

1,319

$

213

$

281

$

494

Northeast G&P

72

48

80

100

300

130

86

216

West

61

82

94

226

463

169

197

366

Other

73

74

59

131

337

72

76

148

Total

$

347

$

359

$

881

$

832

$

2,419

$

584

$

640

$

1,224

Capital investments:

Increases to property, plant, and equipment

$

260

$

382

$

907

$

845

$

2,394

$

484

$

684

$

1,168

Purchases of businesses, net of cash acquired

—

933

—

—

933

1,056

(3

)

1,053

Purchases of and contributions to equity-method investments

56

44

40

26

166

39

30

69

Purchases of other long-term investments

—

3

3

5

11

2

1

3

Total

$

316

$

1,362

$

950

$

876

$

3,504

$

1,581

$

712

$

2,293

(1) Increases to property, plant, and equipment

$

260

$

382

$

907

$

845

$

2,394

$

484

$

684

$

1,168

Changes in related accounts payable and accrued liabilities

31

(67

)

(66

)

(39

)

(141

)

61

(74

)

(13

)

Capital expenditures

$

291

$

315

$

841

$

806

$

2,253

$

545

$

610

$

1,155

Contributions from noncontrolling interests

$

3

$

5

$

7

$

3

$

18

$

3

$

15

$

18

Contributions in aid of construction

$

(3

)

$

9

$

2

$

4

$

12

$

11

$

7

$

18

Proceeds from disposition of equity-method investments

$

—

$

—

$

7

$

—

$

7

$

—

$

—

$

—

Non-GAAP Measures

This news release and accompanying materials may include certain financial measures – adjusted EBITDA, adjusted income (“earnings”), adjusted earnings per share, available funds from operations and dividend 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 (loss) from discontinued operations, 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. Such items are excluded from net income to determine adjusted income and adjusted earnings per share. Management believes this measure provides investors meaningful insight into results from ongoing operations.

Available funds from operations (AFFO) is defined as cash flow from operations excluding the effect of changes in working capital and certain other changes in noncurrent assets and liabilities, reduced by preferred dividends and net distributions to noncontrolling interests. AFFO may be adjusted to exclude certain items that we characterize as unrepresentative of our ongoing operations.

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 assets and the cash that the business is generating.

Neither adjusted EBITDA, adjusted income, nor available funds from operations 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.

Reconciliation of Income (Loss) from Continuing Operations Attributable to The Williams Companies, Inc. to Non-GAAP Adjusted Income

(UNAUDITED)

2022

2023

(Dollars in millions, except per-share amounts)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

1st Qtr

2nd Qtr

Year

Income (loss) from continuing operations attributable to The Williams Companies, Inc. available to common stockholders

$

379

$

400

$

599

$

668

$

2,046

$

926

$

547

$

1,473

Income (loss) from continuing operations - diluted earnings (loss) per common share (1)

$

.31

$

.33

$

.49

$

.55

$

1.67

$

.76

$

.45

$

1.20

Adjustments:

Transmission & Gulf of Mexico

Loss related to Eminence storage cavern abandonments and monitoring

$

—

$

—

$

19

$

12

$

31

$

—

$

—

$

—

Regulatory liability charges associated with decrease in Transco’s estimated deferred state income tax rate

—

—

15

—

15

—

—

—

Net unrealized (gain) loss from derivative instruments

—

—

(1

)

1

—

—

—

—

MountainWest acquisition and transition-related costs

—

—

—

—

—

13

17

30

Total Transmission & Gulf of Mexico adjustments

—

—

33

13

46

13

17

30

West

Trace acquisition costs

—

8

—

—

8

—

—

—

Gain from contract settlement

—

—

—

—

—

(18

)

—

(18

)

Total West adjustments

—

8

—

—

8

(18

)

—

(18

)

Gas & NGL Marketing Services

Amortization of purchase accounting inventory fair value adjustment

15

—

—

—

15

—

—

—

Impact of volatility on NGL linefill transactions

(20

)

—

23

6

9

(3

)

10

7

Net unrealized (gain) loss from derivative instruments

57

288

(5

)

(66

)

274

(333

)

(94

)

(427

)

Total Gas & NGL Marketing Services adjustments

52

288

18

(60

)

298

(336

)

(84

)

(420

)

Other

Regulatory liability charge associated with decrease in Transco’s estimated deferred state income tax rate

—

—

5

—

5

—

—

—

Net unrealized (gain) loss from derivative instruments

66

(47

)

(29

)

(15

)

(25

)

6

11

17

Accrual for loss contingencies

—

—

11

—

11

—

—

—

Total Other adjustments

66

(47

)

(13

)

(15

)

(9

)

6

11

17

Adjustments included in Modified EBITDA

118

249

38

(62

)

343

(335

)

(56

)

(391

)

Adjustments below Modified EBITDA

Amortization of intangible assets from Sequent acquisition

42

41

42

42

167

15

14

29

Depreciation adjustment related to Eminence storage cavern abandonments

—

—

(1

)

—

(1

)

—

—

—

42

41

41

42

166

15

14

29

Total adjustments

160

290

79

(20

)

509

(320

)

(42

)

(362

)

Less tax effect for above items

(40

)

(72

)

(17

)

5

(124

)

78

10

88

Adjustments for tax-related items (2)

—

(134

)

(69

)

—

(203

)

—

—

—

Adjusted income from continuing operations available to common stockholders

$

499

$

484

$

592

$

653

$

2,228

$

684

$

515

$

1,199

Adjusted income from continuing operations - diluted earnings per common share (1)

$

.41

$

.40

$

.48

$

.53

$

1.82

$

.56

$

.42

$

.98

Weighted-average shares - diluted (thousands)

1,221,279

1,222,694

1,222,472

1,224,212

1,222,672

1,225,781

1,219,915

1,223,429

(1) 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.

(2) The second quarter of 2022 includes adjustments for the reversal of valuation allowance due to the expected utilization of certain deferred income tax assets and previously unrecognized tax benefits from the resolution of certain federal income tax audits. The third quarter of 2022 includes an unfavorable adjustment to reverse the net benefit primarily associated with a significant decrease in our estimated deferred state income tax rate, partially offset by an unfavorable revision to a state net operating loss carryforward.

Reconciliation of "Net Income (Loss)" to “Modified EBITDA” and Non-GAAP “Adjusted EBITDA”

(UNAUDITED)

2022

2023

(Dollars in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

1st Qtr

2nd Qtr

Year

Net income (loss)

$

392

$

407

$

621

$

697

$

2,117

$

957

$

494

$

1,451

Provision (benefit) for income taxes

118

(45

)

96

256

425

284

175

459

Interest expense

286

281

291

289

1,147

294

306

600

Equity (earnings) losses

(136

)

(163

)

(193

)

(145

)

(637

)

(147

)

(160

)

(307

)

Other investing (income) loss - net

(1

)

(2

)

(1

)

(12

)

(16

)

(8

)

(13

)

(21

)

Proportional Modified EBITDA of equity-method investments

225

250

273

231

979

229

249

478

Depreciation and amortization expenses

498

506

500

505

2,009

506

515

1,021

Accretion expense associated with asset retirement obligations for nonregulated operations

11

13

12

15

51

15

14

29

(Income) loss from discontinued operations, net of tax

—

—

—

—

—

—

87

87

Modified EBITDA

$

1,393

$

1,247

$

1,599

$

1,836

$

6,075

$

2,130

$

1,667

$

3,797

Transmission & Gulf of Mexico

$

697

$

652

$

638

$

687

$

2,674

$

715

$

731

$

1,446

Northeast G&P

418

450

464

464

1,796

470

515

985

West

260

288

337

326

1,211

304

312

616

Gas & NGL Marketing Services

13

(282

)

20

209

(40

)

567

68

635

Other

5

139

140

150

434

74

41

115

Total Modified EBITDA

$

1,393

$

1,247

$

1,599

$

1,836

$

6,075

$

2,130

$

1,667

$

3,797

Adjustments (1):

Transmission & Gulf of Mexico

$

—

$

—

$

33

$

13

$

46

$

13

$

17

$

30

West

—

8

—

—

8

(18

)

—

(18

)

Gas & NGL Marketing Services

52

288

18

(60

)

298

(336

)

(84

)

(420

)

Other

66

(47

)

(13

)

(15

)

(9

)

6

11

17

Total Adjustments

$

118

$

249

$

38

$

(62

)

$

343

$

(335

)

$

(56

)

$

(391

)

Adjusted EBITDA:

Transmission & Gulf of Mexico

$

697

$

652

$

671

$

700

$

2,720

$

728

$

748

$

1,476

Northeast G&P

418

450

464

464

1,796

470

515

985

West

260

296

337

326

1,219

286

312

598

Gas & NGL Marketing Services

65

6

38

149

258

231

(16

)

215

Other

71

92

127

135

425

80

52

132

Total Adjusted EBITDA

$

1,511

$

1,496

$

1,637

$

1,774

$

6,418

$

1,795

$

1,611

$

3,406

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

Reconciliation of Cash Flow from Operating Activities to Available Funds from Operations (AFFO)

(UNAUDITED)

2022

2023

(Dollars in millions, except coverage ratios)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Year

1st Qtr

2nd Qtr

Year

The Williams Companies, Inc.

Reconciliation of GAAP "Net cash provided (used) by operating activities" to Non-GAAP "Available funds from operations"

Net cash provided (used) by operating activities

$

1,082

$

1,098

$

1,490

$

1,219

$

4,889

$

1,514

$

1,377

$

2,891

Exclude: Cash (provided) used by changes in:

Accounts receivable

3

794

(125

)

61

733

(1,269

)

(154

)

(1,423

)

Inventories, including write-downs

(178

)

177

77

(127

)

(51

)

(45

)

(19

)

(64

)

Other current assets and deferred charges

65

(50

)

47

(29

)

33

4

(28

)

(24

)

Accounts payable

138

(828

)

(53

)

333

(410

)

1,017

203

1,220

Accrued and other current liabilities

149

(125

)

(191

)

(42

)

(209

)

318

(246

)

72

Changes in current and noncurrent derivative assets and liabilities

(101

)

52

(37

)

(8

)

(94

)

(82

)

(37

)

(119

)

Other, including changes in noncurrent assets and liabilities

67

65

73

11

216

40

47

87

Preferred dividends paid

(1

)

—

(1

)

(1

)

(3

)

(1

)

—

(1

)

Dividends and distributions paid to noncontrolling interests

(37

)

(58

)

(46

)

(63

)

(204

)

(54

)

(58

)

(112

)

Contributions from noncontrolling interests

3

5

7

3

18

3

15

18

Adjustment to exclude litigation-related charges in discontinued operations

—

—

—

—

—

—

115

115

Available funds from operations

$

1,190

$

1,130

$

1,241

$

1,357

$

4,918

$

1,445

$

1,215

$

2,660

Common dividends paid

$

518

$

517

$

518

$

518

$

2,071

$

546

$

545

$

1,091

Coverage ratio:

Available funds from operations divided by Common dividends paid

2.30

2.19

2.40

2.62

2.37

2.65

2.23

2.44

Reconciliation of Net Income (Loss) to Modified EBITDA, Non-GAAP Adjusted EBITDA and Cash Flow from Operating Activities to Non-GAAP Available Funds from Operations (AFFO)

2023 Guidance

(Dollars in millions, except per-share amounts and coverage ratio)

Low

Mid

High

Net income (loss)

$

2,080

$

2,230

$

2,380

Provision (benefit) for income taxes

665

715

765

Interest expense

1,220

Equity (earnings) losses

(580

)

Proportional Modified EBITDA of equity-method investments

930

Depreciation and amortization expenses and accretion for asset retirement obligations associated with nonregulated operations

2,065

Other

(14

)

Modified EBITDA

$

6,366

$

6,566

$

6,766

EBITDA Adjustments

34

Adjusted EBITDA

$

6,400

$

6,600

$

6,800

Net income (loss)

$

2,080

$

2,230

$

2,380

Less: Net income (loss) attributable to noncontrolling interests & preferred dividends

100

Net income (loss) attributable to The Williams Companies, Inc. available to common stockholders

$

1,980

$

2,130

$

2,280

Adjustments:

Adjustments included in Modified EBITDA (1)

34

Adjustments below Modified EBITDA (2)

59

Allocation of adjustments to noncontrolling interests

—

Total adjustments

93

Less tax effect for above items

(23

)

Adjusted income available to common stockholders

$

2,050

$

2,200

$

2,350

Adjusted diluted earnings per common share

$

1.67

$

1.80

$

1.92

Weighted-average shares - diluted (millions)

1,225

Available Funds from Operations (AFFO):

Net cash provided by operating activities (net of changes in working capital, changes in current and noncurrent derivative assets and liabilities, and changes in other, including changes in noncurrent assets and liabilities)

$

4,900

$

5,100

$

5,300

Preferred dividends paid

(3

)

Dividends and distributions paid to noncontrolling interests

(225

)

Contributions from noncontrolling interests

53

Available funds from operations (AFFO)

$

4,725

$

4,925

$

5,125

AFFO per common share

$

3.86

$

4.02

$

4.18

Common dividends paid

$

2,190

Coverage Ratio (AFFO/Common dividends paid)

2.16x

2.25x

2.34x

(1) Includes transaction and transition costs associated with the MountainWest acquisition

(2) Includes amortization of Sequent intangible asset of $59 million

Forward-Looking Statements

The reports, filings, and other public announcements of The Williams Companies, Inc. (Williams) 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. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995.

All statements, other than statements of historical facts, included in this report 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:

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 in this report. 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:

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 and referred to below may cause our intentions to change from those statements of intention set forth in this report. 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.

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 for the year ended December 31, 2022, as filed with the SEC on February 27, 2023, as may be supplemented by disclosures in Part II, Item 1A. Risk Factors in subsequent Quarterly Reports on Form 10-Q.

MEDIA CONTACT:

[email protected]

(800) 945-8723

INVESTOR CONTACTS:

Danilo Juvane

(918) 573-5075

Caroline Sardella

(918) 230-9992

Source: Williams

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