The Williams Companies, Inc. (NYSE:WMB) Q2 2022 Earnings Conference Call August 2, 2022 9:30 AM ET Company Participants Danilo Juvane - Vice President of Investor Relations Alan Armstrong - President and CEO John Porter - Chief Financial Officer Micheal Dunn - Chief Operating Officer Chad Zamarin - Senior Vice President of Corporate Strategic Development Lane Wilson - General Counsel Conference Call Participants Chase Mulvehill - Bank of America Marc Solecitto - Barclays Jean Ann Salisbury - Sanford C. Ber ...

The Williams Companies, Inc. (NYSE:WMB) J.P. Morgan Energy, Power & Renewables Conference June 22, 2022 8:20 AM ET Company Participants Micheal Dunn - EVP & COO Conference Call Participants Jeremy Tonet - Equity Analyst for Utilities and Midstream, J.P. Morgan Jeremy Tonet Good morning everyone. Can you hear me? Is the mike on, okay there we go. Good morning everyone. Thank you for joining us. This morning we are very excited to be joined by Micheal Dunn, COO of Williams to talk about all the great things g ...

Key Points Industry and Company * **Company**: The Williams Companies, Inc. (NYSE:WMB) * **Industry**: Energy Infrastructure * **Focus**: Midstream operations, natural gas production and transportation Core Views and Arguments * **European Energy Crisis**: The crisis underscores the importance of energy independence and security, and the role of natural gas as a bridge fuel. * **Energy Demand and Security**: The crisis highlights the need for adequate energy infrastructure and storage to meet growing demand and ensure energy security. * **Natural Gas Prices**: Low natural gas prices are beneficial for the long-term, but high prices can hinder demand and infrastructure development. * **Fugitive Emissions**: The industry must address fugitive methane emissions to overcome objections to natural gas usage. * **Infrastructure Development**: Adequate pipeline capacity is crucial for supporting natural gas production and meeting demand. * **Haynesville Shale**: The Haynesville Shale is a key area for natural gas production and infrastructure development, but it has a limited lifespan. * **Midstream Asset Monetization**: Williams is exploring opportunities to monetize its midstream assets, including the Rockies and Eagle Ford basins. * **Renewable Energy**: Williams is exploring opportunities to integrate renewable energy sources, such as solar and hydrogen, into its operations. * **Capital Allocation**: Williams remains focused on maximizing returns on capital employed and maintaining a low-cost operating model. Other Important Points * **State and Local Politics**: The company is monitoring changes in state and local politics, particularly regarding energy infrastructure and regulations. * **M&A Activity**: Williams is focused on bolt-on acquisitions that offer high returns and leverage its competitive advantages. * **Capital Return**: The company has a $1.5 billion buyback authorization and is exploring other ways to return capital to shareholders, including increasing the dividend.

The Williams Companies, Inc. (NYSE:WMB) Q1 2022 Earnings Conference Call May 3, 2022 9:30 AM ET Company Participants Danilo Juvane - Vice President of Investor Relations Alan Armstrong - President and CEO John Porter - Chief Financial Officer Micheal Dunn - Chief Operating Officer Chad Zamarin - Senior Vice President of Corporate Strategic Development Conference Call Participants Brian Reynolds - UBS Chase Mulvehill - BofA Merrill Lynch Praneeth Satish - Wells Fargo Securities, LLC Gabriel Moreen - Mizuho ...

Part I. Financial Information [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for The Williams Companies, Inc. for the three months ended March 31, 2022, and 2021, including detailed notes on accounting policies and events [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) Net income decreased to $380 million, diluted EPS fell, total assets declined to $46.0 billion, and operating cash flow increased to $1.08 billion Consolidated Statement of Income Highlights (Q1 2022 vs Q1 2021) | Metric | Q1 2022 (Millions) | Q1 2021 (Millions) | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $2,524 | $2,612 | -3.4% | | Operating Income | $654 | $739 | -11.5% | | Net Income Attributable to Williams | $380 | $426 | -10.8% | | Diluted Earnings Per Share | $0.31 | $0.35 | -11.4% | Consolidated Balance Sheet Highlights | Metric | March 31, 2022 (Millions) | Dec 31, 2021 (Millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $604 | $1,680 | | Total Current Assets | $3,154 | $4,549 | | Property, plant, and equipment – net | $29,186 | $29,258 | | Total Assets | $46,049 | $47,612 | | Long-term debt (incl. current) | $22,426 | $23,675 | | Total Equity | $13,971 | $14,101 | Consolidated Statement of Cash Flows Highlights (Q1 2022 vs Q1 2021) | Cash Flow Activity | Q1 2022 (Millions) | Q1 2021 (Millions) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $1,082 | $915 | | Net Cash used in Investing Activities | ($360) | ($257) | | Net Cash used in Financing Activities | ($1,798) | $326 | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail segment realignment, recent acquisitions, $31.3 billion in performance obligations, and a $410 million legal judgment - Effective **January 1, 2022**, the company realigned its segments, creating a new **'Gas & NGL Marketing Services'** segment. This new segment includes legacy NGL and natural gas marketing services previously in the West segment, along with the operations from the Sequent acquisition[30](index=30&type=chunk) - In **April 2022**, the company completed the acquisition of **Trace Midstream's** gas gathering assets in the Haynesville Shale region for approximately **$950 million**[124](index=124&type=chunk) - On **December 29, 2021**, the Delaware Court of Chancery entered a judgment in Williams' favor against Energy Transfer for **$410 million** plus interest and fees related to the terminated merger agreement. The judgment may be appealed[107](index=107&type=chunk) Remaining Performance Obligations as of March 31, 2022 | Period | Amount (Millions) | | :--- | :--- | | 2022 (nine months) | $2,683 | | 2023 | $3,386 | | 2024 | $3,152 | | 2025 | $2,623 | | 2026 | $2,395 | | Thereafter | $17,027 | | **Total** | **$31,266** | [Management's Discussion and Analysis (MD&A)](index=32&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes net income decrease to derivative losses and prior-year storm benefits, projects $2.25-$2.35 billion in capital expenditures, and maintains $4.35 billion in liquidity [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Q1 2022 results show service revenue growth offset by derivative losses and the absence of prior-year storm benefits, leading to mixed segment EBITDA performance - Net income for **Q1 2022** decreased by **$46 million** compared to **Q1 2021**, primarily due to a **$123 million** net unrealized loss on commodity derivatives and the absence of a **$77 million** favorable impact from Winter Storm Uri in **2021**[134](index=134&type=chunk) - Service revenues increased by **$85 million** YoY, mainly from higher gathering and processing rates in the West and Northeast, and higher transportation fees from the Transco Leidy South expansion project[145](index=145&type=chunk) Modified EBITDA by Segment (Q1 2022 vs Q1 2021) | Segment | Q1 2022 (Millions) | Q1 2021 (Millions) | Change (Millions) | | :--- | :--- | :--- | :--- | | Transmission & Gulf of Mexico | $697 | $660 | +$37 | | Northeast G&P | $418 | $402 | +$16 | | West | $260 | $222 | +$38 | | Gas & NGL Marketing Services | $13 | $93 | -$80 | | Other | $5 | $33 | -$28 | | **Total Modified EBITDA** | **$1,393** | **$1,410** | **-$17** | [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) The company projects $2.25-$2.35 billion in capital expenditures, maintains $4.35 billion in liquidity, retired $1.25 billion in debt, and increased its quarterly dividend - Projected growth capital and investment expenditures for **2022** are between **$2.25 billion** and **$2.35 billion**, which includes the Trace Acquisition and Transco expansions[168](index=168&type=chunk) Available Liquidity as of March 31, 2022 | Source | Amount (Millions) | | :--- | :--- | | Cash and cash equivalents | $604 | | Available capacity under credit facility | $3,750 | | **Total Available Liquidity** | **$4,354** | - The company increased its quarterly common stock dividend by approximately **3.7%** to **$0.425 per share**, paid in **March 2022**[175](index=175&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Market risk exposure remains unchanged, with commodity price risk managed by Sequent operations using derivatives, and average daily VaR for Q1 2022 at $6.2 million - The company's primary commodity price risk exposure comes from the **Sequent acquisition**, which uses derivatives to economically hedge its natural gas marketing activities[186](index=186&type=chunk) Sequent Value at Risk (VaR) - Q1 2022 | VaR Metric | Amount (Millions) | | :--- | :--- | | Average | $6.2 | | High | $10.4 | | Low | $4.1 | [Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during Q1 2022 - Based on an evaluation as of **March 31, 2022**, the CEO and CFO concluded that the company's disclosure controls and procedures are **effective at a reasonable assurance level**[193](index=193&type=chunk) - No material changes to internal control over financial reporting occurred during the **first quarter of 2022**[194](index=194&type=chunk) Part II. Other Information [Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, including negotiations with the DOJ for Clean Air Act violations, with further details in Note 12 - The company is in negotiations with the **Department of Justice (DOJ)** to globally resolve alleged violations of **Leak Detection and Repair (LDAR)** regulations under the **Clean Air Act** at multiple gas plant and fractionator facilities[197](index=197&type=chunk) - Other significant litigation, including environmental matters, is detailed in **Note 12** of the financial statements and incorporated by reference here[198](index=198&type=chunk)[199](index=199&type=chunk) [Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) Key risks include commodity price volatility, increasing cybersecurity threats, difficult global financial market conditions, and potential business disruption from geopolitical events - Commodity price volatility for natural gas, NGLs, and oil remains a **significant risk** that could adversely affect financial condition, results, and cash flows[200](index=200&type=chunk)[201](index=201&type=chunk) - The company highlights the risk of **cybersecurity breaches** on its information technology and operational control systems, noting that threats may increase due to the Russian invasion of Ukraine[204](index=204&type=chunk) - Difficult global financial market conditions, industrial contraction, and geopolitical turmoil could negatively impact energy demand, prices, and the company's ability to access financing[205](index=205&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) A $1.5 billion share repurchase program was authorized in September 2021, with no repurchases made as of March 31, 2022 - A **$1.5 billion** share repurchase program was authorized in **September 2021**[207](index=207&type=chunk) - There were **no share repurchases** under the program through **March 31, 2022**[207](index=207&type=chunk) [Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications and XBRL data files, incorporating previously filed documents by reference - The filing includes **CEO and CFO certifications** pursuant to **Sections 302 and 906 of the Sarbanes-Oxley Act**[209](index=209&type=chunk)