Williams : First Quarter Earnings 2025 - Transcript
WMB
Published on 05/07/2025 at 14:02
The Williams Cos., Inc. (WMB)
EDITED TRANSCRIPT
1Q 2025 Earnings Call
May 6, 2025
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, outcomes 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:
Levels of dividends to Williams' stockholders;
Future credit ratings of Williams and its affiliates;
Amounts and nature of future capital expenditures;
Expansion and growth of business and operations;
Expected in-service dates for capital projects;
Financial condition and liquidity;
Business strategy;
Cash flow from operations or results of operations;
Rate case filings;
Seasonality of certain business
components;
Natural gas, natural gas liquids, and crude oil prices, supply, and demand;
Demand for services.
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:
Availability of supplies, market demand, and volatility of prices;
Development and rate of adoption of alternative energy sources;
The impact of existing and future laws and regulations, the regulatory environment, environmental matters, and litigation, as well as our ability and the ability of other energy companies with whom we conduct or seek to conduct business, to obtain necessary permits and approvals, and our ability to achieve favorable rate proceeding outcomes;
Exposure to the credit risk of customers and counterparties;
Our ability to acquire new businesses and assets and successfully integrate those operations and assets into existing businesses as well as successfully expand our facilities, and consummate asset sales on acceptable terms;
The ability to successfully identify, evaluate, and timely execute on capital projects and investment opportunities;
The strength and financial resources of our competitors and the effects of competition;
The amount of cash distributions from and capital requirements of our
investments and joint ventures in which we participate;
The ability to effectively execute our financing plan;
Increasing scrutiny and changing expectations from stakeholders with respect to environmental, social, and governance practices;
The physical and financial risks associated with climate change;
The impacts of operational and developmental hazards and unforeseen interruptions;
The risks resulting from outbreaks or other public health crises;
Risks associated with weather and natural phenomena, including climate conditions and physical damage to our facilities;
Acts of terrorism, cybersecurity incidents, and related disruptions;
Costs and funding obligations for defined benefit pension plans and other postretirement benefit plans;
Changes in maintenance and construction costs, as well as our ability to obtain sufficient construction-related inputs, including skilled labor;
Inflation, interest rates, tariffs on foreign-made materials and goods (including steel and steel pipes)
necessary to our business, and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on customers and suppliers);
Risks related to financing, including restrictions stemming from debt agreements, future changes in credit ratings as determined by nationally recognized credit rating agencies, and the availability and cost of capital;
The ability of the members of the Organization of Petroleum Exporting Countries and other oil exporting nations to agree to and maintain oil price and production controls and the impact on domestic production;
Changes in the current geopolitical situation, including the Russian invasion of Ukraine and conflicts in the Middle East.
Changes in U.S. governmental administration and policies;
Whether we are able to pay current and expected levels of dividends;
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 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 (a) Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 25, 2025, and (b) Part II, Item 1A. Risk Factors in subsequent Quarterly Reports on Form 10-Q.
Vice President-Investor Relations, ESG and Investment Analysis
President, Chief Executive Officer & Inside Director
Chief Financial Officer & Senior Vice President
Chief Operating Officer & Executive Vice President
Corporate Strategic Development Executive Vice President
General Counsel & Senior Vice President
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Analyst, Wells Fargo
Analyst, JP Morgan
Analyst, Citi
Analyst, Barclays
Analyst, Mizuho
Analyst, BofA
Analyst, Goldman Sachs
Analyst, UBS
Analyst, TPH
Analyst, Wolfe
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Vice President, Investor Relations, ESG and Investment Analysis, The Williams Cos., Inc.
Good morning, everyone. Thank you for joining us and for your interest in the Williams Companies. Yesterday afternoon, we released our earnings press release and the presentation that our President and CEO, Alan Armstrong; and our Chief Financial Officer, John Porter, will speak to this morning. Also joining us on the call today are Larry Larsen, our Chief Operating Officer; Lane Wilson, our General Counsel; and Chad Zamarin, our Executive Vice President of Corporate Strategic Development.
In our presentation material, you'll find a disclaimer related to forward-looking statements. This disclaimer is important and integral to our remarks, and you should review it. Also included in our presentation materials are non-GAAP measures that we reconciled to Generally Accepted Accounting Principles, and these reconciliation schedules appear at the back of today's presentation materials.
So, with that, I'll turn it over to Alan Armstrong.
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President, Chief Executive Officer & Inside Director, The Williams Cos., Inc.
Okay well thanks, Danilo, and thank you all for joining us today.
We do have a very positive story to share with you on our first quarter performance, which was really driven by the exceptional results within our base business in this quarter. But before I dive into my remarks, I do want to welcome Larry Larsen, our new Chief Operating Officer, to the call. This is technically day two for Larry, but he's been a valuable member of The Williams team for more than 25 years. So, I know you're going to come to value his perspective and knowledge of our operations, just as you have enjoyed that from Micheal Dunn, who did retire this past Friday. Larry has served as an important member of Micheal's leadership team over the past several years, so this will be a seamless transition with Larry carrying forward the commitment to excellence that Micheal had established in all aspects of our operations. Obviously, some other leadership changes to hit on, but I'll save my remarks on that matter for the end of the call.
So, beginning here on slide 2, it really is staggering when you step back and consider all the facets of our businesses that are providing high-return growth opportunities. The positive results in the near term, like the 9% growth this year, coupled with an improved credit rating, continue to speak for themselves. But the continued string of very high-return projects suggest that we are in the early innings of this long horizon of growth. So, let me just share a few of the drivers for my optimism on this level of growth continuing.
First, we will be a big beneficiary of the fast rising data center power load. We are very encouraged by the uptake we are seeing on the new model we have brought to market and the indirect business we are seeing on our gas transmission systems that is showing up as very high return, large-scale expansions. Socrates is our first example on the direct service front, and we talked first about this project during our earnings call in February. And since then, we have fully contracted this project that will deliver speed to market solutions for the growing data center demand in Ohio.
Williams will invest approximately $1.6 billion to provide committed power generation and associated gas pipeline infrastructure for our customer in this area. The project is backed by a 10-year fixed price power purchase agreement with an opportunity to extend the contract for another five years and beyond. Importantly, we expect the project to generate earnings consistent with a 5x EBITDA build multiple, and impressive return given the low-risk nature of the power purchase agreement and the fact that this project does not leverage Williams' existing asset footprint to a meaningful degree.
We are full steam ahead on this project and anticipate completing the buildout in the second
half of 2026. We also have two other projects that are utilizing the same model in flight and have ordered equipment that has the same backstopping agreements that we used in the original Socrates project. Much more to come on this, but it is clear that we have a model that works for this customer base and the opportunities are developing fast in the space.
Next, on the indirect side, we are pleased to announce Transco's Power Express pipeline, a 950 million cubic feet per day expansion, to markets north of Station 165, helping to serve the power-hungry Virginia area. The project is backed by a significant commitment from an anchor shipper and will utilize existing right-of-ways and infrastructure to dramatically reduce permitting risk and provide scalability. This project will provide the same kind of return as our SESE project, and the demand for this capacity has been robust.
And, finally, we acquired a 10% interest in Cogentrix Energy, closing on this deal in early March. This investment enhances our Sequent market intelligence and gives Williams insight into how to better serve the emerging power markets with natural gas supply.
Importantly, we are excited to be working with the Quantum team on this business and to ensure that the gas supply is optimized for these gas-fired power plants.
Next, turning to our operational execution - our team continues to flawlessly deliver on a string of high-return projects that will accelerate earnings growth throughout the balance of the year. This quarter, we successfully placed two projects into service, the Southeast Energy Connector in Alabama and the Texas to Louisiana Energy Pathway along the Gulf Coast. These fully contracted Transco expansions were designed to reduce land use and minimize community and environmental impacts, while also delivering clean and affordable natural gas volumes to the region.
These projects demonstrate both LNG export growth and coal-to-gas conversion opportunities. Our project execution team will continue to deliver on projects throughout this year - starting construction on another expansion in the southeast on Transco, the LEG project in Haynesville and out west on our Overthrust Westbound Expansion. These projects represent nearly 2 Bcf a day coming online for the balance of this year.
Also in the Deepwater, the Deepwater really is coming on strong this year and shows no signs of slowing down. We recently completed two expansions that add significant earnings growth. The Whale expansion went into service in the first quarter and has been ramping up through the first quarter, and Chevron's Ballymore started up two weeks ago. Both of these prospects are large scale and will be significant contributors for the balance of the year.
Additionally in the Deepwater, both the Shenandoah and Salamanca floaters are now being commissioned, and these will drive significant cash flows across our Discovery asset, which is now wholly owned. These projects are expected to make meaningful contributions in the third quarter.
Disclaimer
The Williams Companies Inc. published this content on May 07, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 07, 2025 at 18:01 UTC.