Williams(US:WMB)2022-05-02 20:28Part I. Financial Information Financial Statements 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 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 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 acquisition30 - In April 2022, the company completed the acquisition of Trace Midstream's gas gathering assets in the Haynesville Shale region for approximately $950 million124 - 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 appealed107 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) 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 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 2021134 - 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 project145 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 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 expansions168 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 2022175 Quantitative and Qualitative Disclosures About Market Risk 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 activities186 Sequent Value at Risk (VaR) - Q1 2022 | VaR Metric | Amount (Millions) | | :--- | :--- | | Average | $6.2 | | High | $10.4 | | Low | $4.1 | Controls and Procedures 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 level193 - No material changes to internal control over financial reporting occurred during the first quarter of 2022194 Part II. Other Information Legal Proceedings 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 facilities197 - Other significant litigation, including environmental matters, is detailed in Note 12 of the financial statements and incorporated by reference here198199 Risk Factors 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 flows200201 - 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 Ukraine204 - Difficult global financial market conditions, industrial contraction, and geopolitical turmoil could negatively impact energy demand, prices, and the company's ability to access financing205 Unregistered Sales of Equity Securities and Use of Proceeds 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 2021207 - There were no share repurchases under the program through March 31, 2022207 Exhibits 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 Act209