TULSA, Okla.--(BUSINESS WIRE)--Williams Partners L.P. (NYSE: WPZ) today announced unaudited first-quarter 2012 net income of $348 million, or $0.85 per common limited-partner unit, compared with first-quarter 2011 net income of $307 million, or $0.81 per common unit.
|Summary Financial Information||1Q|
|Amounts in millions, except per-unit amounts.||2012||2011|
|Net income per common L.P. unit||$||0.85||$||0.81|
|Distributable cash flow (DCF) (1)||$||475||$||441|
|Cash distribution coverage ratio (1)||1.31x||1.60x|
(1) Distributable Cash Flow and Cash Distribution Coverage Ratio are non-GAAP measures. Reconciliations to the most relevant measures included in GAAP are attached to this news release.
The increase in net income for the first quarter is primarily due to increases in fee-based revenues in both the midstream and gas pipeline businesses, as well as higher natural gas liquid (NGL) margins in the midstream business. There is a more detailed discussion of the midstream and gas pipeline results in the business segment performance section below.
Strong Results Drive Increase in DCF for 1Q 2012
For first-quarter 2012, Williams Partners generated $475 million in distributable cash flow, compared with $441 million in first-quarter 2011. The previously noted improvement in the midstream and gas pipeline businesses drove the 8-percent increase in distributable cash flow for the first quarter.
Alan Armstrong, chief executive officer of Williams Partners’ general partner, made the following comments:
“The partnership performed very well in the first quarter, with recent expansion projects driving strong increases in fee-based revenue.
“We also completed an equity offering and are poised to close the Caiman acquisition. That acquisition, along with our expanding Susquehanna Supply Hub, will position Williams Partners as the leading infrastructure solution provider in the Marcellus Shale.
“We’re also very well positioned to capture the transportation growth being driven by increased demand for gas-fired power generation. Power generation is the driver behind about a third of the volumes in proposed projects in development on our Transco pipeline. We anticipate three Transco expansion projects coming online this year.”
Business Segment Performance
|Consolidated Segment Profit||1Q|
|Amounts in millions||2012||2011|
|Midstream Gas & Liquids||308||262|
|Total Segment Profit||$||488||$||437|
|Adjusted Segment Profit*||$||489||$||437|
* A schedule reconciling segment profit to adjusted segment profit is attached to this press release.
|Key Operational Metrics|
|Fee-based Revenues* (millions)|
|Midstream Gas & Liquids||217||230||249||248||258|
|NGL margins (millions)||$||207||$||253||$||234||$||287||$||242|
|NGL equity volumes (gallons in millions)||289||308||274||317||308|
|Per-unit NGL margins ($/gallon)||$||0.71||$||0.83||$||0.85||$||0.91||$||0.79|
* Fee-based revenue is a non-GAAP measure. A reconciliation to the most relevant measure included in GAAP is attached to this news release.
Williams Partners owns interests in three major interstate natural gas pipeline systems – Transco, Northwest Pipeline and Gulfstream. These systems have a combined peak day delivery capacity of more than 14 billion cubic feet per day (Bcf/d), and transport approximately 14 percent of the natural gas consumed in the United States.
Gas Pipeline reported segment profit of $180 million for first-quarter 2012, compared with $175 million for first-quarter 2011.
Higher transportation revenues associated with expansion projects placed into service in 2011 drove the improved results in the first quarter. The absence in 2012 of a reversal of project feasibility costs from expense to capital which occurred in 2011 and higher selling, general and administrative expenses partially offset the higher transportation revenues in first-quarter 2012.
Midstream Gas & Liquids
Midstream provides natural gas gathering, treating, and processing; deepwater production handling and oil transportation; and NGL fractionation, storage and transportation services.
The business reported segment profit of $308 million for first-quarter 2012, compared with segment profit of $262 million for first-quarter 2011.
A 19-percent increase in fee-based revenues, as well as higher NGL margins, drove the improved results in first-quarter 2012. A decline in margins related to the marketing of NGLs for the partnership and third parties, together with higher general and administrative expenses partially offset the higher fee-based revenues and NGL margins in the first quarter.
The increase in Midstream’s fee-based revenues was driven by higher volumes in the partnership’s Susquehanna Supply Hub area of the Marcellus Shale, including additions from the February acquisition of the Laser Northeast Gathering System. Higher volumes on the Perdido Norte gas and oil pipelines in the deepwater Gulf of Mexico also contributed to the higher fee-based revenues. Also, gathering volumes in the West were higher than first-quarter 2011 when severe winter weather conditions in the Rockies reduced gas production volumes.
Lower average natural gas prices, partially offset by lower ethane prices, as well as an increase in NGL equity volumes sold, drove the 17-percent increase in NGL margins in the first quarter. The decline in NGL margins from fourth-quarter 2011 to first-quarter 2012 was due to significantly lower ethane prices. A large number of ethane cracker turnarounds was the primary driver of the lower ethane prices.
Slight Change to 2013 Capital Expenditures, Other Previous Guidance Unchanged
Williams Partners is increasing its 2013 capital expenditure guidance by $75 million at guidance midpoint, primarily to reflect the Virginia Southside expansion project on Transco. Previous earnings and capital expenditure guidance for 2012 and 2014, which were issued on March 19 in conjunction with the Caiman acquisition, is unchanged.
The partnership’s 2012-14 commodity price assumptions and guidance data is available in today's earnings presentation that will be posted shortly at www.williamslp.com/investors.
First-Quarter Materials to be Posted Shortly, Q&A Webcast Scheduled for Tomorrow
Williams Partners’ first-quarter 2012 financial results package will be posted shortly at www.williamslp.com. The package will include the data book and analyst package, and the investor presentation with a recorded commentary from Alan Armstrong, CEO of Williams Partners’ general partner.
The partnership will host the first-quarter Q&A live webcast on Thursday, April 26 at 11 a.m. EDT. A link to the live webcast, as well as replays of the first-quarter webcast in both streaming and downloadable podcast formats following the event, will be available at www.williamslp.com. A limited number of phone lines will be available at (877) 795-3646. International callers should dial (719) 325-4784.
Annual Analyst Day Meeting Set for May 22
Williams plans to host its annual Analyst Day on Tuesday, May 22. The event will feature in-depth presentations on Williams Partners’ midstream and gas pipeline businesses.
Presenters will include Alan Armstrong, president and chief executive officer; Don Chappel, chief financial officer; Randy Barnard, president of the gas pipeline business; Rory Miller, president of the midstream business; and other key members of Williams’ management team.
Williams’ Analyst Day will be broadcast live via webcast beginning on May 22 at 8:45 a.m. EDT. Participants can access the webcast at www.williams.com or www.williamslp.com. Slides will be available on the morning of the event on both web sites for viewing, downloading and printing. A replay of the Analyst Day webcast will be available for two weeks following the event at the web sites listed above.
Definitions of Non-GAAP Financial Measures
This press release includes certain financial measures – Distributable Cash Flow, Cash Distribution Coverage Ratio, Fee-based Revenues, and Adjusted Segment Profit – that are non-GAAP financial measures as defined under the rules of the SEC.
For Williams Partners L.P., Adjusted Segment Profit excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Management believes Adjusted Segment Profit provides investors meaningful insight into Williams Partners L.P.'s results from ongoing operations.
For Williams Partners L.P. we define Fee-based Revenues as total revenues less commodity-based and tracked revenue. Such excluded items can be volatile due to changing market conditions, which are largely beyond our management’s control. Fee-based revenues provides investors with information about the growth of our revenues that are not subject to this volatility.
For Williams Partners L.P. we define Distributable Cash Flow as net income plus depreciation and amortization and cash distributions from our equity investments less our earnings from our equity investments, distributions to noncontrolling interests and maintenance capital expenditures. We also adjust for payments and/or reimbursements under omnibus agreements with Williams and certain other items.
For Williams Partners L.P. 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 calculated using the most directly comparable GAAP measure, net income.
This press 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 Fee-based Revenues, Adjusted Segment Profit nor Distributable Cash Flow are intended to represent cash flows for the period, nor are they presented as an alternative to revenues, 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 L.P. (NYSE: WPZ)
Williams Partners L.P. is a leading diversified master limited partnership focused on natural gas transportation; gathering, treating, and processing; storage; natural gas liquid (NGL) fractionation; and oil transportation. The partnership owns interests in three major interstate natural gas pipelines that, combined, deliver 14 percent of the natural gas consumed in the United States. The partnership’s gathering and processing assets include large-scale operations in the U.S. Rocky Mountains and both onshore and offshore along the Gulf of Mexico. Williams (NYSE: WMB) owns approximately 69 percent of Williams Partners, including the general-partner interest. More information is available at www.williamslp.com.
Williams Partners L.P. is a limited partnership formed by The Williams Companies, Inc. (Williams). Our reports, filings, and other public announcements 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, and Section 21E of the Securities Exchange Act of 1934, as amended. You typically can identify forward-looking statements 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," 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:
- Amounts and nature of future capital expenditures;
- Expansion and growth of our business and operations;
- Financial condition and liquidity;
- Business strategy;
- Cash flow from operations or results of operations;
- The levels of cash distributions to unitholders;
- Seasonality of certain business components; and
- Natural gas, natural gas liquids, and crude oil prices and demand.
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 announcement. 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:
- Whether we have sufficient cash from operations to enable us to pay current and expected levels of cash distributions following establishment of cash reserves and payment of fees and expenses, including payments to our general partner;
- Availability of supplies, market demand, volatility of prices, and the availability and cost of capital;
- Inflation, interest rates and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on our customers and suppliers);
- The strength and financial resources of our competitors;
- Ability to acquire new businesses and assets and integrate those operations and assets into our existing businesses, as well as expand our facilities;
- Development of alternative energy sources;
- The impact of operational and development hazards;
- Costs of, changes in, or the results of laws, government regulations (including safety and climate change regulation and changes in natural gas production from exploration and production areas that we serve), environmental liabilities, litigation and rate proceedings;
- Our allocated 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 strategy and financing, including restrictions stemming from our debt agreements, future changes in our credit ratings and the availability and cost of credit;
- Risks associated with future weather conditions;
- Acts of terrorism, including cybersecurity threats and related disruptions; and
- 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 to 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 in this announcement. 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 interests 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. Investors are urged to closely consider the disclosures and risk factors in our annual report on Form 10-K filed with the SEC on February 28, 2012, and our quarterly reports on Form 10-Q available from our offices or from our website at www.williamslp.com.
|Reconciliation of Non-GAAP Measures|
|(Dollars in millions, except coverage ratios)||1st Qtr||2nd Qtr||3rd Qtr||4th Qtr||Year||1st Qtr|
|Williams Partners L.P.|
|Reconciliation of Non-GAAP "Distributable Cash Flow" to GAAP "Net income"|
|Depreciation and amortization||150||154||155||152||611||156|
|Non-cash amortization of debt issuance costs included in interest expense||5||5||3||4||17||4|
|Equity earnings from investments||(25||)||(36||)||(40||)||(41||)||(142||)||(30||)|
|Reimbursements (payments) from/(to) Williams under omnibus agreement||8||2||6||15||31||6|
|Maintenance capital expenditures||(34||)||(106||)||(148||)||(126||)||(414||)||(61||)|
|Distributable Cash Flow excluding equity investments||411||357||318||395||1,481||423|
|Plus: Equity investments cash distributions to Williams Partners L.P.||30||40||50||49||169||52|
|Distributable Cash Flow||$||441||$||397||$||368||$||444||$||1,650||$||475|
|Total cash distributed:||$||276||$||286||$||294||$||311||$||1,167||$||363||(a)|
|Distributable Cash Flow divided by Total cash distributed||1.60||1.39||1.25||1.43||1.41||1.31|
|Net income divided by Total cash distributed||1.11||1.18||1.16||1.26||1.18||0.96|
(a) Includes approximately $23 million in distributions reflecting additional units to be issued in conjunction with the Caiman acquisition.
|Reconciliation of GAAP "Segment Profit" to Non-GAAP "Adjusted Segment Profit"|
|(Dollars in millions)||1st Qtr||2nd Qtr||3rd Qtr||4th Qtr||Year||1st Qtr|
|Midstream Gas & Liquids||262||319||301||341||1,223||308|
|Loss related to Eminence storage facility leak||4||3||6||2||15||1|
|Gain on sale of base gas from Hester storage field||(4||)||-||-||-||(4||)||-|
|Total Gas Pipeline adjustments||-||3||6||2||11||1|
|Total adjustments included in segment profit||-||3||6||2||11||1|
|Adjusted segment profit||$||437||$||474||$||477||$||519||$||1,907||$||489|
|Non-GAAP Reconciliation of Fee Revenues to Total Segment Revenues|
|(Dollars in millions)||1st Qtr||2nd Qtr||3rd Qtr||4th Qtr||Year||1st Qtr|
|Gas Pipeline revenues:|
|Total Gas Pipeline revenues||$||416||$||407||$||429||$||426||$||1,678||$||422|
|Midstream Gas & Liquids revenues:|
|Total Midstream Gas & Liquids revenues||$||1,163||$||1,264||$||1,244||$||1,380||$||5,051||$||1,263|