Williams Partners Reports Second-Quarter 2014 Financial Results

  • Distributable Cash Flow (DCF) From Partnership’s Operations Is $504 Million, Up 30% vs. Year-Ago
  • Adjusted Segment Profit + DD&A is $719 Million, Up 16% vs. Year-Ago
  • 2Q 2014 Net Income Is $232 Million or $0.11 per Common Unit
  • Geismar Rebuild & Expansion Substantially Complete; Safety-System Upgrades Pushing Startup to 4Q 2014, Lowering 2014 Financial Guidance as a Result
  • Continue to Expect More Than 68% Growth in DCF for 2016 vs. 2013
  • Partnership Reaffirms Guidance for LP per Unit Distribution Growth of Approximately 6% Annually at Mid-Point 2014, 2015 and 4.5% at Mid-Point 2016, While Growing Cash Distribution Coverage
  • Williams Partners’ Conflicts Committee Evaluating Proposed Merger with Access Midstream Partners

TULSA, Okla.--()--Williams Partners L.P. (NYSE: WPZ):

Summary Financial Information     2Q     YTD
Amounts in millions, except per-unit and coverage ratio amounts. All income amounts attributable to Williams Partners L.P. 2014   2013 2014   2013
(Unaudited)
 
Distributable cash flow (DCF) (1) $ 504 $ 407 $ 1,109 $ 932
Less: Pre-partnership DCF (2)   -   (20 )   (23 )   (48 )
DCF attributable to partnership operations $ 504 $ 387   $ 1,086   $ 884  
 
Cash distribution coverage ratio (1) .87x .79x .95x .92x
 
Adjusted segment profit + DD&A (1) $ 719 $ 619 $ 1,490 $ 1,303
 
Net income $ 232 $ 271 $ 584 $ 615
Net income per common L.P. unit $ 0.11 $ 0.31 $ 0.47 $ 0.81

(1) Distributable Cash Flow, Cash Distribution Coverage Ratio and Adjusted Segment Profit + DD&A are non-GAAP measures. Reconciliations to the most relevant measures included in GAAP are attached to this news release.

(2) This amount represents DCF from the Canadian asset dropdown (acquired February 2014) for periods prior to acquisition by the partnership.

Williams Partners L.P. (NYSE: WPZ) today announced $504 million in distributable cash flow (DCF) attributable to partnership operations in second-quarter 2014, compared with $387 million in DCF attributable to partnership operations in second-quarter 2013.

The $117 million increase in DCF for the quarter was driven by $46 million, or 7 percent, growth in fee-based revenues compared with second-quarter 2013, as well as $52 million in higher Geismar results. The Geismar plant remained off-line for the quarter; however, assumed business interruption insurance proceeds for the second quarter totaled $138 million and were included in the calculation of DCF. Additionally, second-quarter 2014 DCF was favorably affected by $23 million in DCF from the Canadian asset dropdown in 2014.

The partnership reported year-to-date DCF of $1.086 billion, compared with $884 million year-to-date 2013. The $202 million increase in year-to-date DCF was driven by $109 million, or 8 percent, growth in fee-based revenues compared with year-to-date 2013, as well as $113 million in higher Geismar results, which include the favorable impacts of assumed business interruption insurance.

For second-quarter 2014, Williams Partners generated $719 million in adjusted segment profit + DD&A, compared with $619 million in second-quarter 2013. The $100 million increase in second-quarter adjusted segment profit + DD&A was driven primarily by the same factors that drove the favorable increase in DCF detailed above.

Year-to-date adjusted segment profit + DD&A was $1.490 billion, compared with $1.303 billion year-to-date 2013. The $187 million increase in year-to-date adjusted segment profit + DD&A was driven primarily by the same factors that drove the favorable increase in year-to-date DCF detailed above.

Williams Partners reported unaudited second-quarter 2014 net income attributable to controlling interests of $232 million, or $0.11 per common limited-partner unit, compared with net income of $271 million, or $0.31 per common limited-partner unit for second-quarter 2013. Prior-period results throughout this release have been recast to include the results of the Canadian asset dropdown in February 2014.

The decrease in second-quarter net income was primarily due to the ongoing effects of the June 13, 2013 Geismar incident, which resulted in $90 million lower olefin margins partially offset by the receipt of $50 million of related insurance recoveries. Additionally, the 2014 period was unfavorably affected by $23 million lower natural gas liquids (NGL) margins and $21 million in higher net interest expense. These unfavorable effects were partially offset by a $46 million, or 7 percent, increase in fee-based revenues in second-quarter 2014 compared with the year-ago period.

Year-to-date through June 30, Williams Partners reported net income of $584 million, or $0.47 per common limited-partner unit, compared with $615 million, or $0.81 per common limited-partner unit, for the first half of 2013.

For the first half of 2014, fee-based revenues were up $109 million, or 8 percent, compared with the first half of 2013. However, the increase in fee-based revenues was more than offset by $61 million, or 23 percent, lower NGL margins and $26 million lower Geismar results including insurance. Additionally, the 2014 period was unfavorably affected by $31 million higher net interest expense and $28 million higher depreciation primarily associated with ongoing growth in our Northeast G&P segment.

Williams Partners recently announced that it increased its quarterly cash distribution to unitholders to $0.9165 per unit, a 6.3 percent increase over the prior year amount.

CEO Perspective

Alan Armstrong, chief executive officer of Williams Partners’ general partner, made the following comments:

“We’re pleased to report a 30 percent increase in DCF driven by continued growth in our fee-based business and the benefit of the Canadian asset dropdown to Williams Partners earlier this year.

“While we’ve enjoyed strong growth in our fee-based revenues, we expect to see even more growth in the next half of the year as we bring into service two large, deepwater projects, Gulfstar One and Keathley Canyon. We’re also seeing tailwinds building behind our strategy to grow cash flow by building large-scale, fee-based infrastructure that connects the best supplies to the best markets in North America.

“Consistent with our strategy, we’ve contracted and added to guidance two additional Transco expansions to our roster of projects under construction or in regulatory review while we continue to evaluate a robust level of both new business and acquisition activity.

“The rebuild and expansion of our Geismar olefins plant is substantially complete, but due to more time required to modify existing safety systems we now expect full production and ethylene sales by fourth-quarter 2014. While the delayed startup of the expanded plant is disappointing, the safety of our employees comes first.”

Business Segment Performance

Williams Partners     2Q - 2014     2Q - 2013
Amounts in millions (loss)     Segment Profit   Adj.**   Adj. Segment Profit*   Adj. Segment Profit + DD&A* Segment Profit   Adj.**   Adj. Segment Profit*   Adj. Segment Profit + DD&A*
Northeast G&P $ 15   $ 17   $ 32   $ 72 $ 12   $ 0   $ 12   $ 44
Atlantic-Gulf 168 0 168 259 152 (5 ) 147 234
West 152 6 158 218 162 0 162 220
NGL & Petchem Services   58     96     154     170   101     6       107     121
Total $ 393   $ 119   $ 512   $ 719 $ 427   $ 1     $ 428   $ 619
                               
YTD - 2014 YTD - 2013
Segment Profit   Adj.**   Adj. Segment Profit*   Adj. Segment Profit + DD&A* Segment Profit   Adj.**   Adj. Segment Profit*   Adj. Segment Profit + DD&A*
Northeast G&P $ 21 $ 23 $ 44 $ 123 $ 3 $ 0 $ 3 $ 64
Atlantic-Gulf 333 0 333 518 311 (11 ) 300 480
West 317 6 323 441 348 0 348 467
NGL & Petchem Services   225     150     375     408   259     6       265     292
Total $ 896   $ 179   $ 1,075   $ 1,490 $ 921     ($5 )   $ 916   $ 1,303

* Schedules reconciling segment profit to adjusted segment profit and adjusted segment profit + DD&A are attached to this news release.

** Adjustments for second-quarter and year-to-date 2014 periods consist primarily of assumed business interruption insurance related to the Geismar plant. Second quarter assumes $138 million of business interruption insurance offset by actual insurance recoveries of $50 million. Year-to-date assumes $311 million of business interruption insurance offset by actual insurance recoveries of $175 million.

Northeast G&P

Northeast G&P includes the partnership’s midstream gathering and processing business in the Marcellus and Utica shale regions, including Susquehanna Supply Hub and Ohio Valley Midstream, as well as its 51-percent equity investment in Laurel Mountain Midstream, and its 58-percent equity investment in Caiman Energy II. This segment is in the early stages of developing large-scale energy infrastructure solutions for the Marcellus and Utica shale regions.

Northeast G&P reported adjusted segment profit + DD&A of $72 million for second-quarter 2014, compared with $44 million in second-quarter 2013. Year-to-date through June 30, Northeast G&P reported adjusted segment profit + DD&A of $123 million, compared with $64 million for the first half of 2013.

The second-quarter 2014 results include $29 million in higher fee-based revenues driven by 33 percent higher average daily gathered volumes versus second-quarter 2013. Adjustments to reported segment profit include the removal of a $17 million non-cash impairment of equipment held for sale. The year-to-date results were driven primarily by the same factors that drove the quarterly results.

Atlantic-Gulf

Atlantic-Gulf includes the Transco interstate gas pipeline and a 41-percent consolidated interest in the Constitution interstate gas pipeline development project, which we consolidate. The segment also includes the partnership’s significant natural gas gathering and processing and crude production handling and transportation in the Gulf Coast region. These operations include the partnership’s 51-percent ownership interest in the Gulfstar development project, as well as its 50-percent interest in Gulfstream and a 60-percent interest in Discovery.

Atlantic-Gulf reported adjusted segment profit + DD&A of $259 million for second-quarter 2014, compared with $234 million for second-quarter 2013. Year-to-date through June 30, Atlantic-Gulf reported adjusted segment profit + DD&A of $518 million, compared with $480 million for the first half of 2013.

Adjusted segment profit + DD&A for the second quarter and year-to-date 2014 increased primarily due to higher transportation fee revenues associated with expansion projects. In addition, the year-to-date increases include new transportation rates effective in March 2013 for Transco and lower operating expense.

West

West includes the partnership’s Northwest Pipeline interstate gas pipeline system, as well as gathering, processing and treating operations in Wyoming, the Piceance Basin and the Four Corners area.

West reported second-quarter 2014 adjusted segment profit + DD&A of $218 million, compared with $220 million for second-quarter 2013. Year-to-date through June 30, West reported adjusted segment profit + DD&A of $441 million, compared with $467 million for the first half of 2013.

The lower adjusted segment profit + DD&A during the year-to-date period was due to lower NGL margins, primarily driven by the expiration of a natural gas contract in September 2013, partially offset by lower operating expenses.

NGL & Petchem Services

NGL & Petchem Services includes an 83.3 percent interest in an olefins production facility in Geismar, La., along with a refinery grade propylene splitter and pipelines in the Gulf Coast region. Following the completion in February 2014 of the dropdown of Williams’ Canadian operations, this segment now includes midstream operations in Alberta, Canada, including an oil sands offgas processing plant near Fort McMurray, 260 miles of NGL and olefins pipelines and an NGL/olefins fractionation facility and butylene/butane splitter facility at Redwater. This segment also includes the partnership’s energy commodities marketing business, an NGL fractionator and storage facilities near Conway, Kan. and a 50-percent interest in Overland Pass Pipeline.

NGL & Petchem Services reported second-quarter 2014 adjusted segment profit + DD&A of $170 million, compared with $121 million for second-quarter 2013. Year-to-date through June 30, NGL & Petchem reported adjusted segment profit + DD&A of $408 million, compared with $292 million for the first half of 2013. Prior period results have been recast to include the results of the assets acquired in the Canadian asset dropdown in February 2014.

The increase in second-quarter adjusted segment profit + DD&A was primarily due to $52 million higher Geismar results. The Geismar plant remained off-line for the quarter; however, assumed business interruption insurance proceeds for the second quarter totaled $138 million and were included in the calculation of adjusted segment profit + DD&A. The year-to-date increase was also driven by $113 million in higher Geismar results, including assumed business interruption insurance proceeds of $311 million.

Guidance

Williams Partners is lowering its earnings and cash flow guidance and revising its capital spending guidance for 2014 as a result of delays in Geismar’s expected in-service date. Consolidated earnings, cash flow and capital expenditures guidance for 2015 and 2016 are unchanged.

Williams Partners is reaffirming its guidance for cash distribution per limited partner unit growth of 6 percent (at mid-point) in each of 2014 and 2015; and 4.5 percent (at mid-point) in 2016. Williams Partners continues to expect DCF to increase more than 68 percent for 2016 versus 2013. Several key drivers and assumptions are embedded in this estimate. The largest risks to achieving this growth in 2014 are:

a. The timely producer startup of the Gulfstar One project and Discovery’s Keathley Canyon project.

b. The completion and commissioning of new facilities in the Marcellus producing region along with expected volume growth.

c. Natural gas and natural gas liquids prices that drive assumed NGL margins and drilling activities, as well as olefins prices and margins.

d. Recovery of assumed business interruption insurance proceeds relating to the Geismar plant outage in 2014.

e. Geismar restart and ethylene sales commencing in the fourth-quarter 2014.

The Geismar rebuild and expansion projects are now substantially complete and the start-up process is planned to be initiated in September following the installation of certain safety equipment. Williams Partners is taking these extra precautions to enhance the safety of our people and the public. Williams Partners is targeting first ethylene production and sales in October; however, start-up issues could cause delays. As a result, financial guidance now includes a range of outcomes for first ethylene production and sales ranging from mid-October to the end of December 2014. The delay from the previous expectation of ethylene sales resulted from the recent decision to install certain safety-related equipment and to provide additional contingency associated with the startup process. The Geismar rebuild project capital is expected to increase by approximately $20 million as a result of the safety modifications.

Williams Partners has $500 million of combined business interruption and property damage insurance related to the Geismar incident (subject to deductibles and other limitations). Risks associated with the expected full recovery of $500 million in insurance proceeds related to the Geismar incident could result in full-year 2014 distributable cash flow that is below the guidance range. In the second quarter, the insurers paid $50 million of the most recent claim-payment request of $200 million and the total insurance receipts to-date are $225 million. The insurers continue to evaluate Williams Partners’ claims and have recently raised questions around key assumptions involving our business-interruption claim. As a result, the insurers have elected to make a partial payment pending further assessment of these issues. Williams Partners continues to work with insurers in support of all claims, as submitted, and is vigorously pursuing collection of the remaining $275 million of the insurance limits.

The assumed expanded plant restart date and repair cost estimate are subject to various uncertainties and risks that could cause the actual results to be materially different from these assumptions. The assumed property damage and business interruption insurance proceeds are also subject to various uncertainties and risks that could cause the actual results to be materially different from these assumptions.

The partnership’s current guidance for DCF, earnings and capital expenditures are displayed in the following table:

Williams Partners Guidance (1)     2014     2015     2016
Amounts are in millions except coverage ratio. Low   Mid   High Low   Mid   High Low   Mid   High
DCF attributable to partnership ops. (2) $ 1,800   $ 1,950   $ 2,100 $ 2,605   $ 2,785   $ 2,965 $ 2,800   $ 3,085   $ 3,370
 
Total Cash Distribution (3) $ 2,340 $ 2,370 $ 2,400 $ 2,632 $ 2,714 $ 2,796 $ 2,868 $ 2,950 $ 3,032
 
Cash Distribution Coverage Ratio (2) .77x .82x .88x .99x 1.03x 1.06x .98x 1.05x 1.11x
 
Adjusted Segment Profit (2): $ 1,860 $ 2,010 $ 2,160 $ 2,610 $ 2,830 $ 3,050 $ 2,925 $ 3,225 $ 3,525
 
Adjusted Segment Profit + DD&A (2): $ 2,745 $ 2,920 $ 3,095 $ 3,620 $ 3,865 $ 4,110 $ 4,030 $ 4,355 $ 4,680
 
Capital Expenditures:
Maintenance $ 305 $ 340 $ 375 $ 295 $ 325 $ 355 $ 300 $ 330 $ 360
Growth   3,140     3,390     3,640   1,900     2,125     2,350   1,750     1,950     2,150
Total Capital Expenditures $ 3,445   $ 3,730   $ 4,015 $ 2,195   $ 2,450   $ 2,705 $ 2,050   $ 2,280   $ 2,510

(1) Commodity price assumptions that are used to develop the above are included in our quarterly data book that is available at www.williamslp.com.

(2) Distributable Cash Flow, Cash Distribution Coverage Ratio, Adjusted Segment Profit and Adjusted Segment Profit + DD&A are non-GAAP measures. Reconciliations to the most relevant measures included in GAAP are attached to this news release.

(3) The cash distributions in guidance are on an accrual basis and reflect an approximate annual growth rate in limited partner distributions of 5 percent to 7 percent annually in 2014 and 2015, and 3 percent to 6 percent in 2016.

Second-Quarter 2014 Materials to be Posted Shortly, Q&A Webcast Scheduled for Tomorrow

Williams Partners’ second-quarter 2014 financial results will be posted shortly at www.williamslp.com. The information will include the data book and analyst package.

Williams Partners and Williams will host a joint Q&A live webcast on Thursday, July 31, at 9:30 a.m. EDT. A limited number of phone lines will be available at (800) 479-9001. International callers should dial (719) 325-2199. A link to the webcast, as well as replays of the webcast in both streaming and downloadable podcast formats, will be available for two weeks following the event at www.williams.com and www.williamslp.com.

Form 10-Q

The partnership plans to file its second-quarter 2014 Form 10-Q with the Securities and Exchange Commission this week. Once filed, the document will be available on both the SEC and Williams Partners websites.

Definitions of Non-GAAP Financial Measures

This press release includes certain financial measures – distributable cash flow, cash distribution coverage ratio, adjusted segment profit and adjusted segment profit + DD&A – 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 and may include assumed business interruption insurance related to the Geismar plant. Adjusted segment profit + DD&A is adjusted to add back depreciation and amortization expense. Management believes these measures provide investors meaningful insight into Williams Partners L.P.'s results from ongoing operations.

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 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 adjusted segment profit, adjusted segment profit + DD&A 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 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, both onshore and offshore along the Gulf of Mexico, and Canada. Williams (NYSE: WMB) owns approximately 66 percent of Williams Partners, including the general-partner interest. More information is available at www.williamslp.com, where the partnership routinely posts important information.

Certain matters contained in this document include “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. 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 document 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," "proposed," "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 levels of cash distributions to unitholders;
  • 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;
  • Seasonality of certain business components;
  • Natural gas, natural gas liquids and olefins prices, supply and demand;
  • Demand for our services; and
  • The proposed merger of Access Midstream Partners, L.P. (ACMP) and us (the Proposed Merger).

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 document. 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:

  • The structure, terms, timing and approval of the Proposed Merger, as to be negotiated by each of our and ACMP’s conflicts committees;
  • Whether we have sufficient cash from operations to enable us to pay current and expected levels of cash distributions, if any, following establishment of cash reserves and payment of fees and expenses, including payments to our general partner;
  • Availability of supplies, market demand and volatility of prices;
  • Inflation, interest rates, fluctuation in foreign exchange 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 execute investment opportunities;
  • Our ability to acquire new businesses and assets and successfully integrate those operations and assets into our existing businesses, as well as successfully expand facilities;
  • Development of alternative energy sources;
  • The impact of operational and development hazards and unforeseen interruptions;
  • Our ability to recover expected insurance proceeds related to the Geismar plant;
  • Costs of, changes in, or the results of laws, government regulations (including safety and environmental regulations), 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 risks of customers and counterparties;
  • Risks related to financing, including restrictions stemming from our debt agreements, future changes in our credit ratings 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;
  • 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.

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, 2013, and Part II, Item 1A. Risk Factors of our Forms 10-Q.

       
 
2013 2014
(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 Non-GAAP “Distributable cash flow” to GAAP “Net income”
 
Net income $ 344 $ 272 $ 289 $ 218 $ 1,123 $ 352 $ 234 $ 586
Income attributable to noncontrolling interests (3 ) (3 ) (2 ) (2 )
Depreciation and amortization 196 191 201 203 791 208 207 415
Non-cash amortization of debt issuance costs included in interest expense 3 4 4 3 14 4 3 7
Equity earnings from investments (18 ) (35 ) (31 ) (20 ) (104 ) (23 ) (32 ) (55 )
Allocated reorganization-related costs 2 2
Impairment of certain equipment held for sale 17 17
Loss related to Geismar Incident 6 4 4 14
Geismar Incident adjustment for insurance and timing (35 ) 118 83 54 96 150
Contingency loss 9 16 25
Reimbursements from Williams under omnibus agreements 4 4 2 3 13 3 4 7
Loss related to Opal incident 6 6
Plymouth incident adjustment 3 3
Canadian income tax 4 4
Maintenance capital expenditures   (44 )     (76 )     (79 )     (59 )     (258 )   (36 )     (90 )     (126 )
 
Distributable cash flow excluding equity investments 487 366 364 483 1,700 562 450 1,012
Plus: Equity investments cash distributions to Williams Partners L.P.   38       41       34       41       154     43       54       97  
 
Distributable cash flow 525 407 398 524 1,854 605 504 1,109
Less: Pre-partnership distributable cash flow   28       20       20       15       83     23             23  
 
Distributable cash flow attributable to partnership operations $ 497     $ 387     $ 378     $ 509     $ 1,771   $ 582     $ 504     $ 1,086  
 
 
Total cash distributed $ 473 $ 489 $ 442 $ 556 $ 1,960 $ 566 $ 577 $ 1,143
 
Coverage ratios:
Distributable cash flow attributable to partnership operations divided by Total cash distributed   1.05       0.79       0.86       0.92       0.90     1.03       0.87       0.95  
 
Net income divided by Total cash distributed   0.73       0.56       0.65       0.39       0.57     0.62       0.41       0.51  
 
 
Reconciliation of GAAP “Segment Profit (Loss)” to Non-GAAP “Adjusted Segment Profit (Loss)” and “Adjusted Segment Profit (Loss) + DD&A”
(UNAUDITED)                    
 
2013 2014
(Dollars in millions)     1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Year 1st Qtr   2nd Qtr   Year
                                     
Segment profit (loss):
Northeast G&P $ (9 ) $ 12 $ (1 ) $ (26 ) $ (24 ) $ 6 $ 15 $ 21
Atlantic-Gulf 159 152 137 166 614 165 168 333
West 186 162 207 186 741 165 152 317
NGL & Petchem Services   158       101       68       19       346     167     58     225
Total segment profit (loss) $ 494     $ 427     $ 411     $ 345     $ 1,677   $ 503   $ 393   $ 896
 
Segment adjustments:

Northeast G&P

Share of impairments at equity method investee $ $ $ $ 7 $ 7 $ $ $
Contingency loss 9 16 25
Loss related to compressor station fire 6 6
Impairment of certain equipment held for sale                                   17     17
Total Northeast G&P adjustments 9 23 32 6 17 23

Atlantic-Gulf

Litigation settlement gain (6 ) (6 )
Net loss (recovery) related to Eminence storage facility leak         (5 )     5       (2 )     (2 )          
Total Atlantic-Gulf adjustments (6 ) (5 ) 5 (2 ) (8 )

West

Loss related to Opal incident                                   6     6
Total West adjustments 6 6

NGL & Petchem Services

Loss related to Geismar Incident 6 4 4 14
Geismar Incident adjustment for insurance and timing               (35 )     118       83     54     96     150
Total NGL & Petchem Services adjustments 6 (31 ) 122 97 54 96 150
                           
Total segment adjustments $ (6 )   $ 1     $ (17 )   $ 143     $ 121   $ 60   $ 119   $ 179
 
Adjusted segment profit (loss):
Northeast G&P $ (9 ) $ 12 $ 8 $ (3 ) $ 8 $ 12 $ 32 $ 44
Atlantic-Gulf 153 147 142 164 606 165 168 333
West 186 162 207 186 741 165 158 323
NGL & Petchem Services   158       107       37       141       443     221     154     375
Total adjusted segment profit (loss) $ 488     $ 428     $ 394     $ 488     $ 1,798   $ 563   $ 512   $ 1,075
 
Depreciation and amortization (DD&A):
Northeast G&P $ 29 $ 32 $ 33 $ 38 $ 132 $ 39 $ 40 $ 79
Atlantic-Gulf 93 87 92 91 363 94 91 185
West 61 58 58 59 236 58 60 118
NGL & Petchem Services   13       14       18       15       60     17     16     33
Total depreciation and amortization $ 196     $ 191     $ 201     $ 203     $ 791   $ 208   $ 207   $ 415
 
Adjusted segment profit (loss) + DD&A:
Northeast G&P $ 20 $ 44 $ 41 $ 35 $ 140 $ 51 $ 72 $ 123
Atlantic-Gulf 246 234 234 255 969 259 259 518
West 247 220 265 245 977 223 218 441
NGL & Petchem Services   171       121       55       156       503     238     170     408
Total adjusted segment profit (loss) + DD&A $ 684     $ 619     $ 595     $ 691     $ 2,589   $ 771   $ 719   $ 1,490

Note: Segment profit (loss) includes equity earnings (losses) and income (loss) from investments reported in other income (expense) - net below operating income in the Consolidated Statement of Comprehensive Income. Equity earnings (losses) result from investments accounted for under the equity method. Income (loss) from investments results from the management of certain equity investments.

       
 
Williams Partners L.P.
2014 Guidance 2015 Guidance
(Dollars in millions, except coverage ratios)     Midpoint Midpoint
             
Reconciliation of Non-GAAP “Distributable Cash Flow” to GAAP “Net income”
Net income $ 1,566 $ 2,035
Depreciation and amortization 910 1,035
Maintenance capital expenditures (340 ) (325 )
Attributable to noncontrolling interests (35 ) (105 )
Geismar Incident adjustment for insurance and timing (115 )
Other / Rounding   (13 )   145  
Distributable cash flow 1,973 2,785
Less: Pre-partnership distributable cash flow   23      
Distributable cash flow attributable to partnership operations $ 1,950   $ 2,785  
 
Total cash to be distributed $ 2,370 $ 2,714
 
Coverage ratios:
Distributable cash flow attributable to partnership operations divided by Total cash to be distributed   0.82     1.03  
 
Net income divided by Total cash to be distributed   0.66     0.75  
 
Reconciliation of Non-GAAP “Adjusted Segment Profit” and “Adjusted Segment Profit + DD&A” to GAAP “Segment Profit”
Segment profit:
Northeast G&P $ 308 $ 355
Atlantic-Gulf 630 965
West 614 595
NGL & Petchem Services 1,015 915
Unallocated Revisions   (335 )    
Total segment profit $ 2,232   $ 2,830  
Adjustments:

Northeast G&P - loss related to compressor station fire

$ 6 $
Northeast G&P - impairment of certain equipment held for sale 17
Northeast G&P - other (136 )
Atlantic-Gulf
West - loss related to Opal incident 6
NGL & Petchem Services - Geismar Incident adjustment for insurance and timing   (115 )    
Total adjustments $ (222 ) $  
Adjusted segment profit:
Northeast G&P $ 195 $ 355
Atlantic-Gulf 630 965
West 620 595
NGL & Petchem Services 900 915
Unallocated Revisions   (335 )    
Total adjusted segment profit $ 2,010   $ 2,830  
Depreciation and amortization (DD&A):
Northeast G&P $ 170 $ 210
Atlantic-Gulf 430 495
West 235 235
NGL & Petchem Services   75     95  
Total depreciation and amortization $ 910   $ 1,035  
Adjusted segment profit + DD&A:
Northeast G&P $ 365 $ 565
Atlantic-Gulf 1,060 1,460
West 855 830
NGL & Petchem Services 975 1,010
Unallocated Revisions   (335 )    
Total adjusted segment profit + DD&A $ 2,920   $ 3,865  

Contacts

Williams Partners L.P.
Media Contact:
Tom Droege, 918-573-4034
or
Investor Contacts:
John Porter, 918-573-0797
or
Sharna Reingold, 918-573-2078

Release Summary

Williams Partners Reports Second-Quarter 2014 Results

Sharing

Contacts

Williams Partners L.P.
Media Contact:
Tom Droege, 918-573-4034
or
Investor Contacts:
John Porter, 918-573-0797
or
Sharna Reingold, 918-573-2078