TULSA, Okla.--(BUSINESS WIRE)--Williams Partners L.P. (NYSE: WPZ):
| Quarterly Summary Financial Information | 1Q | |||||||||
| Amounts in millions, except per-unit and coverage ratio amounts. All income amounts attributable to Williams Partners L.P. | 2014 | 2013 | ||||||||
| (Unaudited) | ||||||||||
| Net income | $ | 352 | $ | 344 | ||||||
| Net income per common L.P. unit | $ | 0.36 | $ | 0.50 | ||||||
| Distributable cash flow (DCF) (1) | 605 | 525 | ||||||||
| Less: Pre-partnership DCF (2) | (23 | ) | (28 | ) | ||||||
| DCF attributable to partnership operations | $ | 582 | $ | 497 | ||||||
| Cash distribution coverage ratio (1) |
1.03 |
x |
1.05 |
x |
||||||
(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.
(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) announced unaudited first-quarter 2014 net income of $352 million, or $0.36 per common limited-partner unit, compared with net income of $344 million, or $0.50 per common limited-partner unit for first-quarter 2013. Prior-period results throughout this release have been recast to include the results of the assets acquired in the Canadian asset dropdown in February 2014.
The increase in net income during first-quarter 2014 is primarily due to $63 million, or 9 percent, increase in fee-based revenues, partially offset by $38 million, or 26 percent, lower natural gas liquid (NGL) margins and $18 million higher operating costs (primarily depreciation) associated with ongoing growth in our Northeast G&P segment.
Distributable Cash Flow & Distributions
For first-quarter 2014, Williams Partners generated $582 million in DCF attributable to partnership operations, compared with $497 million in DCF attributable to partnership operations in first-quarter 2013.
The $85 million increase in DCF for the quarter was driven by $63 million, or 9 percent, growth in fee-based revenues, as well as $63 million in higher Geismar results (including the benefit of expected business interruption insurance recoveries and planned plant expansion), partially offset by $38 million lower NGL margins and other changes.
Williams Partners recently announced that it increased its quarterly cash distribution to unitholders to $0.9045 per unit, a 6.7-percent increase over the year-ago amount.
CEO Perspective
Alan Armstrong, chief executive officer of Williams Partners’ general partner, made the following comments:
“Williams Partners’ performance was strong in the first quarter. Our operations performed well during the harsh winter, as we continued our trend of posting significant quarterly increases in fee-based revenues.
“From an execution perspective, we completed or made significant progress on several large-scale projects in the first quarter. We added a second fractionator to our Moundsville, West Virginia facility, substantially completed the Keathley Canyon deepwater pipeline and prepared Gulfstar One for commissioning. Additionally, the Geismar olefins plant is expected to begin the startup of its expanded production in June.
“We’re excited about the accelerating pace of expansion projects at Transco, including Atlantic Sunrise, Dalton Lateral and our newly announced Gulf Trace project. The Atlantic Sunrise and Gulf Trace projects will serve as important infrastructure for future LNG export facilities at Cove Point and Sabine Pass.
“Our strong performance, steadfast execution and constantly growing business opportunities give us confidence in our continued expectation of 50 percent DCF growth in 2015 versus 2013 with minimal equity issuances in 2014 and none planned for 2015. Growing cash flows are shifting financing toward debt while we continue to maintain investment grade credit metrics.”
Business Segment Performance
| 1Q | |||||||||||||||
|
Segment Profit |
Segment Profit + |
||||||||||||||
| Amounts in millions | 2014 | 2013 | 2014 | 2013 | |||||||||||
| Northeast G&P | $6 | ($9 | ) | $45 |
$20 |
||||||||||
| Atlantic-Gulf | 165 | 159 | 259 | 252 | |||||||||||
| West | 165 | 186 | 223 | 247 | |||||||||||
| NGL & Petchem Services | 167 | 158 | 184 | 171 | |||||||||||
| Total | $503 | $494 | $711 |
$690 |
|||||||||||
| Adjustments | 60 | (6 | ) | 60 | (6 | ) | |||||||||
| Total | $563 | $488 | $771 |
$684 |
|||||||||||
* Schedules reconciling segment profit to adjusted segment profit and adjusted segment profit + DD&A are attached to this news release.
| Williams Partners | 2013 | 2014 | ||||||||||||||||||||||||||||
| Key Operational Metrics | 1Q | 2Q | 3Q | 4Q | 1Q | 1Q Change | ||||||||||||||||||||||||
| Year-over-year | Sequential | |||||||||||||||||||||||||||||
| Fee-based Revenues (millions) | $ | 685 | $ | 705 | $ | 721 | $ | 754 | $ | 748 | 9 | % | -1 | % | ||||||||||||||||
| NGL Margins (millions) | $ | 144 | $ | 117 | $ | 131 | $ | 127 | $ | 106 | -26 | % | -17 | % | ||||||||||||||||
| Ethane Equity sales (million gallons) | 23 | 43 | 57 | 24 | 33 | 43 | % | 38 | % | |||||||||||||||||||||
| Per-Unit Ethane NGL Margins ($/gallon) | $ | 0.03 | $ | 0.02 | -$0.01 | $ | 0.02 | $ | 0.20 | 567 | % | 900 | % | |||||||||||||||||
| Non-Ethane Equity sales (million gallons) | 163 | 157 | 153 | 134 | 113 | -31 | % | -16 | % | |||||||||||||||||||||
| Per-Unit Non-Ethane NGL Margins ($/gallon) | $ | 0.87 | $ | 0.75 | $ | 0.85 | $ | 0.94 | $ | 0.88 | 1 | % | -6 | % | ||||||||||||||||
| Olefin Margins (millions) | $ | 150 | $ | 117 | $ | 23 | $ | 12 | $ | 28 | -81 | % | 133 | % | ||||||||||||||||
| Geismar ethylene sales volumes (millions of lbs.) | 246 | 211 | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||
| Geismar ethylene margin ($/pound) | $ | 0.37 | $ | 0.33 | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||
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 58.4-percent equity investment in Caiman Energy II. Caiman Energy II owns a 50 percent interest in Blue Racer Midstream. 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 segment profit of $6 million for first-quarter 2014, compared with segment loss of $9 million for first-quarter 2013.
The improved results are primarily due to a $36 million increase in fee revenues driven by 41 percent higher volumes and improved Laurel Mountain Midstream equity earnings. Results also reflect higher operating costs, primarily driven by increased depreciation associated with this rapidly growing segment.
Atlantic-Gulf
Atlantic-Gulf includes the Transco interstate gas pipeline and a 41 percent 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 a 51 percent interest in the Gulfstar project, a 50 percent interest in Gulfstream and a 60 percent interest in Discovery.
Atlantic-Gulf reported segment profit of $165 million for first-quarter 2014, compared with $159 million for first-quarter 2013.
Segment profit for the quarter increased primarily due to higher transportation fee revenues associated with expansion projects and new transportation rates effective in March 2013 for Transco, partially offset by lower NGL margins.
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 segment profit of $165 million for first-quarter 2014, compared with $186 million for first-quarter 2013.
Lower segment profit for the quarter was due to $33 million lower NGL margins, primarily driven by the expiration of a natural gas processing contract in September 2013. This decrease was partially offset by $13 million 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 segment profit of $167 million for first-quarter 2014, compared with $158 million for first-quarter 2013. First-quarter 2013 results have been recast to include the results of the assets acquired in the Canadian asset dropdown in February 2014.
Segment profit for the quarter increased $9 million, which primarily includes the net effect of insurance recoveries related to last year’s Geismar incident offsetting the impact of lost production.
Williams Partners – Operational Achievements
Northeast G&P
Williams Partners steadily increased the Northeast gathered volumes in first-quarter 2014 despite difficult winter weather conditions, reaching a new monthly average record of 2.3 billion cubic feet per day in the Utica-Marcellus. Average daily gathered volumes increased 38 percent in first quarter 2014 versus first quarter 2013. The Susquehanna Supply Hub grew volumes by 37 percent, Ohio Valley Midstream grew volumes by 63 percent and Laurel Mountain Midstream grew volumes by 29 percent during the quarter.
Williams Partners completed installation of additional fractionation capacity and is on track to install a de-ethanizer and stabilizer in the first half of 2014 at Ohio Valley Midstream to keep pace with producer demand.
Atlantic-Gulf
In the deepwater Gulf of Mexico, Williams Partners positioned the floating spar and completed the installation of the platform of Gulfstar One, the first-of-its-kind floating production spar, on schedule to start serving our deepwater customers in the third quarter of 2014. The turn-key product, which is part of the partnership’s offshore field development program, combines production handling services with export pipeline, oil and gas gathering and processing services.
In the Gulf of Mexico, Williams Partners completed installation of the 215-mile Keathley Canyon Connector 20-inch deepwater pipeline. The $460 million project, which includes a new shelf platform and an onshore methanol extraction plant, is due to be completed and ready to receive production within the fourth quarter of 2014.
Timely expansions to the Transco pipeline system drove record-breaking volume deliveries in areas stretching from Mississippi to New York City. Transco set a three-day delivery record Jan. 6-8, 2014 when it delivered an average of 11.12 million dekatherms per day.
Williams Partners announced that the Atlantic Sunrise expansion project received binding commitments from nine shippers for 100 percent of the 1.7 million dekatherms of daily firm transportation capacity. The project includes 15-year shipper commitments from producers, local distribution companies and power generators. Williams Partners expects to bring Atlantic Sunrise into service in the second half of 2017, assuming all necessary regulatory approvals are received in a timely manner.
West
The Willow Creek processing plant in the Piceance Basin achieved a new quarterly average daily inlet volume throughput record of 479 million cubic feet per day in the first quarter.
NGL & Petchem Services
Williams Partners continues to rebuild, turnaround and expand the Geismar Olefins plant, which is expected to begin startup in the latter half of June 2014. The expansion will increase the ethylene production capacity by 600 million pounds per year to a total capacity of 1.95 billion pounds per year. Williams Partners’ share of the total capacity is approximately 1.7 billion pounds per year.
Guidance
Williams Partners’ consolidated profitability and cash flow guidance ranges are unchanged from guidance issued on February 19, 2014.
Williams Partners is reaffirming its guidance for cash distribution per limited partner unit growth of 6 percent in each of 2014 and 2015. Williams Partners continues to expect DCF for 2015 versus 2013 to increase within a range of $800 million to $1.2 billion. Several key drivers and assumptions are embedded in this estimate. The largest risks to achieving this growth in 2014 are:
a. Natural gas and natural gas liquids prices that drive assumed NGL margins and drilling activities, as well as olefins prices and margins.
b. Recovery of business interruption insurance proceeds offsetting the majority of the Geismar plant outage in 2014, which assumes a June startup.
c. The timely project completion and producer startup of the Gulfstar One project and Discovery’s Keathley Canyon System.
d. The delivery of new facilities in the Marcellus producing region along with expected volume growth.
e. The in-service date for Transco’s Rockaway Lateral.
Williams Partners has $500 million of combined business interruption and property damage insurance related to the Geismar incident (subject to deductibles and other limitations) that is expected to significantly mitigate the financial loss. Based on commodity pricing assumptions and property damage estimates, the partnership estimates approximately $430 million of cash recoveries from insurers related to business interruption losses and approximately $70 million related to property damage. In first quarter 2014, the insurers paid a second installment of $125 million and the total amount received to date is $175 million.
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.
Capital expenditures included in guidance for 2014 and 2015 have been increased by approximately $250 million. The increase includes capital expenditures related to new projects, including the Gulf Trace project in the Atlantic-Gulf, timing shifts between years and other various adjustments.
The partnership’s guidance for its earnings, distributable cash flow and capital expenditures are displayed in the following table:
| Williams Partners Guidance | 2014 | 2015 | |||||||||||||||||||||||
| Amounts are in millions except coverage ratio. | Low | Mid | High | Low | Mid | High | |||||||||||||||||||
| DCF attributable to partnership ops. (1) | $ | 2,220 | $ | 2,350 | $ | 2,480 | $ | 2,605 | $ | 2,785 | $ | 2,965 | |||||||||||||
| Total Cash Distribution (2) | $ | 2,351 | $ | 2,419 | $ | 2,487 | $ | 2,632 | $ | 2,714 | $ | 2,796 | |||||||||||||
| Cash Distribution Coverage Ratio (1) | .94x | .97x | 1.0x | .99x | 1.03x | 1.06x | |||||||||||||||||||
| Adjusted Segment Profit (1): | $ | 2,165 | $ | 2,345 | $ | 2,525 | $ | 2,610 | $ | 2,830 | $ | 3,050 | |||||||||||||
| Adjusted Segment Profit + DD&A (1): | $ | 3,060 | $ | 3,265 | $ | 3,470 | $ | 3,620 | $ | 3,865 | $ | 4,110 | |||||||||||||
| Capital Expenditures: | |||||||||||||||||||||||||
| Maintenance | $ | 305 | $ | 340 | $ | 375 | $ | 295 | $ | 325 | $ | 355 | |||||||||||||
| Growth | 3,000 | 3,250 | 3,500 | 1,900 | 2,125 | 2,350 | |||||||||||||||||||
| Total Capital Expenditures | $ | 3,305 | $ | 3,590 | $ | 3,875 | $ | 2,195 | $ | 2,450 | $ | 2,705 | |||||||||||||
| (1) 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. | |||||||||||||||||||||||||
| (2) The cash distributions in guidance are on an accrual basis and reflect an approximate annual growth rate in limited partner distributions of 6% for each of 2014 and 2015. | |||||||||||||||||||||||||
Williams, Williams Partners Analyst Day Set for May 14
Williams (NYSE: WMB) is scheduled to host its annual Analyst Day event May 14. During the event, Williams' management will give in-depth presentations covering all of Williams' and Williams Partners L.P.'s (NYSE:WPZ) energy infrastructure businesses and provide 2016 guidance. The event is scheduled from 8:30 a.m. to approximately 2 p.m. EDT.
On the day of the event, www.williams.com and www.williamslp.com will feature presentation files for download along with a link to a live webcast. A replay of the Analyst Day webcast will be available for two weeks following the event.
First-Quarter Materials to be Posted Shortly, Q&A Webcast Scheduled for Tomorrow
Williams Partners’ first-quarter 2014 financial results will be posted shortly at www.williamslp.com. The information will include the data book and analyst package.
Williams and Williams Partners L.P. will host a joint Q&A live webcast on Thursday, May 1, at 9:30 a.m. EDT. A limited number of phone lines will be available at (888) 949-2165. International callers should dial (719) 325-4855. A link to the live first-quarter 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 company plans to file its first-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 websites.
Definitions of Non-GAAP Financial Measures
This news 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. Adjusted segment profit + DD&A is further 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, income attributable 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 news 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.
Williams Partners L.P.
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. We make these forward-looking statements in reliance on the safe harbor protections provided under the private Securities Litigation Reform Act of 1995.
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," "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:
- 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;
- Natural gas, natural gas liquids, and olefins prices, supply and demand;
- Demand for our 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 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, 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 our 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;
- Ability to acquire new businesses and assets and successfully integrate those operations and assets into our existing businesses, as well as successfully expand our facilities;
- Development of alternative energy sources;
- The impact of operational and development hazards and unforeseen interruptions;
- 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 our customers and counterparties;
- Risks related 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;
- 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 26, 2014, and each of our quarterly reports on Form 10-Q available from our offices or from our website at www.williamslp.com.
Reconciliation of Non-GAAP Measures
(UNAUDITED)
This press release includes certain financial measures, adjusted segment profit, adjusted segment profit + DD&A, distributable cash flow, and cash distribution coverage ratio that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission.
For Williams Partners L.P., adjusted segment profit excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Adjusted segment profit + DD&A is further 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 equity investments, income attributable to noncontrolling interests and maintenance capital expenditures. We also adjust for payments and/or reimbursements under omnibus agreements with Williams and certain other adjustments. Total distributable cash flow is reduced by any amounts associated with operations which occurred prior to our ownership of the underlying assets to arrive at distributable cash flow attributable to partnership operations.
For Williams Partners L.P., we also calculate the ratio of distributable cash flow attributable to partnership operations 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.
| 2013* | 2014 | ||||||||||||||||||||||||||||||
| (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” | |||||||||||||||||||||||||||||||
| Net income | $ | 344 | $ | 272 | $ | 289 | $ | 218 | $ | 1,123 | $ | 352 | |||||||||||||||||||
| Income attributable to noncontrolling interests | — | — | — | (3 | ) | (3 | ) | — | |||||||||||||||||||||||
| Depreciation and amortization | 196 | 191 | 201 | 203 | 791 | 208 | |||||||||||||||||||||||||
| Non-cash amortization of debt issuance costs included in interest expense | 3 | 4 | 4 | 3 | 14 | 4 | |||||||||||||||||||||||||
| Equity earnings from investments | (18 | ) | (35 | ) | (31 | ) | (20 | ) | (104 | ) | (23 | ) | |||||||||||||||||||
| Allocated reorganization-related costs | 2 | — | — | — | 2 | — | |||||||||||||||||||||||||
| Loss related to Geismar Incident | — | 6 | 4 | 4 | 14 | — | |||||||||||||||||||||||||
| Geismar Incident adjustment for insurance and timing | — | — | (35 | ) | 118 | 83 | 54 | ||||||||||||||||||||||||
| Contingency (gain) loss | — | — | 9 | 16 | 25 | — | |||||||||||||||||||||||||
| Net reimbursements from Williams under omnibus agreements | 4 | 4 | 2 | 3 | 13 | 3 | |||||||||||||||||||||||||
| Maintenance capital expenditures | (44 | ) | (76 | ) | (79 | ) | (59 | ) | (258 | ) | (36 | ) | |||||||||||||||||||
| Distributable cash flow excluding equity investments | 487 | 366 | 364 | 483 | 1,700 | 562 | |||||||||||||||||||||||||
| Plus: Equity investments cash distributions to Williams Partners L.P. | 38 | 41 | 34 | 41 | 154 | 43 | |||||||||||||||||||||||||
| Distributable cash flow | 525 | 407 | 398 | 524 | 1,854 | 605 | |||||||||||||||||||||||||
| Less: Pre-partnership Distributable cash flow | 28 | 20 | 20 | 15 | 83 | 23 | |||||||||||||||||||||||||
| Distributable cash flow attributable to partnership operations | $ | 497 | $ | 387 | $ | 378 | $ | 509 | $ | 1,771 | $ | 582 | |||||||||||||||||||
| Total cash distributed | $ | 473 | $ | 489 | $ | 442 | $ | 556 | $ | 1,960 | $ | 566 | |||||||||||||||||||
| 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 | |||||||||||||||||||||||||
| Net income divided by Total cash distributed | 0.73 | 0.56 | 0.65 | 0.39 | 0.57 | 0.62 | |||||||||||||||||||||||||
| *Recast due to the dropdown of the Canadian operations to Williams Partners in first quarter 2014. | |||||||||||||||||||||||||||||||
| Reconciliation of GAAP “Segment Profit” to Non-GAAP “Adjusted Segment Profit” and “Adjusted Segment Profit + DD&A” | ||||||||||||||||||||||||||||||
| (UNAUDITED) | ||||||||||||||||||||||||||||||
| 2013* | 2014 | |||||||||||||||||||||||||||||
| (Dollars in millions) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | Year | 1st Qtr | ||||||||||||||||||||||||
| Segment profit (loss): | ||||||||||||||||||||||||||||||
| Northeast G&P | $ | (9 | ) | $ | 12 | $ | (1 | ) | $ | (26 | ) | $ | (24 | ) | $ | 6 | ||||||||||||||
| Atlantic-Gulf | 159 | 152 | 137 | 166 | 614 | 165 | ||||||||||||||||||||||||
| West | 186 | 162 | 207 | 186 | 741 | 165 | ||||||||||||||||||||||||
| NGL & Petchem Services | 158 | 101 | 68 | 19 | 346 | 167 | ||||||||||||||||||||||||
| Total segment profit | $ | 494 | $ | 427 | $ | 411 | $ | 345 | $ | 1,677 | $ | 503 | ||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||
|
Northeast G&P |
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| Share of impairments at equity method investee | $ | — | $ | — | $ | — | $ | 7 | $ | 7 | $ | — | ||||||||||||||||||
| Contingency loss | — | — | 9 | 16 | 25 | — | ||||||||||||||||||||||||
| Loss related to compressor station fire | — | — | — | — | — | 6 | ||||||||||||||||||||||||
| Total Northeast G&P adjustments | — | — | 9 | 23 | 32 | 6 | ||||||||||||||||||||||||
|
Atlantic-Gulf |
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| 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 | ) | — | ||||||||||||||||||||
|
NGL & Petchem Services |
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| Loss related to Geismar Incident | — | 6 | 4 | 4 | 14 | — | ||||||||||||||||||||||||
| Geismar Incident adjustment for insurance and timing | — | — | (35 | ) | 118 | 83 | 54 | |||||||||||||||||||||||
| Total NGL & Petchem Services adjustments | — | 6 | (31 | ) | 122 | 97 | 54 | |||||||||||||||||||||||
| Total adjustments included in segment profit | $ | (6 | ) | $ | 1 | $ | (17 | ) | $ | 143 | $ | 121 | $ | 60 | ||||||||||||||||
| Adjusted segment profit (loss): | ||||||||||||||||||||||||||||||
| Northeast G&P | $ | (9 | ) | $ | 12 | $ | 8 | $ | (3 | ) | $ | 8 | $ | 12 | ||||||||||||||||
| Atlantic-Gulf | 153 | 147 | 142 | 164 | 606 | 165 | ||||||||||||||||||||||||
| West | 186 | 162 | 207 | 186 | 741 | 165 | ||||||||||||||||||||||||
| NGL & Petchem Services | 158 | 107 | 37 | 141 | 443 | 221 | ||||||||||||||||||||||||
| Total adjusted segment profit | $ | 488 | $ | 428 | $ | 394 | $ | 488 | $ | 1,798 | $ | 563 | ||||||||||||||||||
| Depreciation and amortization (DD&A): | ||||||||||||||||||||||||||||||
| Northeast G&P | $ | 29 | $ | 32 | $ | 33 | $ | 38 | $ | 132 | $ | 39 | ||||||||||||||||||
| Atlantic-Gulf | 93 | 87 | 92 | 91 | 363 | 94 | ||||||||||||||||||||||||
| West | 61 | 58 | 58 | 59 | 236 | 58 | ||||||||||||||||||||||||
| NGL & Petchem Services | 13 | 14 | 18 | 15 | 60 | 17 | ||||||||||||||||||||||||
| Total depreciation and amortization | $ | 196 | $ | 191 | $ | 201 | $ | 203 | $ | 791 | $ | 208 | ||||||||||||||||||
| Adjusted segment profit (loss) + DD&A: | ||||||||||||||||||||||||||||||
| Northeast G&P | $ | 20 | $ | 44 | $ | 41 | $ | 35 | $ | 140 | $ | 51 | ||||||||||||||||||
| Atlantic-Gulf | 246 | 234 | 234 | 255 | 969 | 259 | ||||||||||||||||||||||||
| West | 247 | 220 | 265 | 245 | 977 | 223 | ||||||||||||||||||||||||
| NGL & Petchem Services | 171 | 121 | 55 | 156 | 503 | 238 | ||||||||||||||||||||||||
| Total adjusted segment profit + DD&A | $ | 684 | $ | 619 | $ | 595 | $ | 691 | $ | 2,589 | $ | 771 | ||||||||||||||||||
| * Recast due to the dropdown of the Canadian operations to Williams Partners in the first quarter of 2014. | ||||||||||||||||||||||||||||||
|
Note: Segment profit (loss) includes equity earnings (losses) and income (loss) from investments reported in other investing income (loss) - net 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. |
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| 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 | $ | 1,918 | $ | 2,085 | ||||||
| Depreciation and amortization | 920 | 1,035 | ||||||||
| Maintenance capital expenditures | (340 | ) | (325 | ) | ||||||
| Attributable to noncontrolling interests | (45 | ) | (105 | ) | ||||||
| Geismar Incident adjustments | (116 | ) | — | |||||||
| Other / Rounding | 36 | 95 | ||||||||
| Distributable cash flow | 2,373 | 2,785 | ||||||||
| Less: Pre-partnership Distributable cash flow | 23 | — | ||||||||
| Distributable cash flow attributable to partnership operations | $ | 2,350 | $ | 2,785 | ||||||
| Total cash to be distributed | $ | 2,419 | $ | 2,714 | ||||||
| Coverage ratios: | ||||||||||
| Distributable cash flow divided by Total cash to be distributed | 0.97 | 1.03 | ||||||||
| Net income divided by Total cash to be distributed | 0.79 | 0.77 | ||||||||
| Reconciliation of Non-GAAP “Adjusted Segment Profit” and “Adjusted Segment Profit + DD&A” to GAAP “Segment Profit” | ||||||||||
| Segment profit: | ||||||||||
| Northeast G&P | $ | 189 | $ | 355 | ||||||
| Atlantic-Gulf | 630 | 965 | ||||||||
| West | 620 | 595 | ||||||||
| NGL & Petchem Services | 1,016 | 915 | ||||||||
| Total segment profit | $ | 2,455 | $ | 2,830 | ||||||
| Adjustments: | ||||||||||
| Northeast G&P- loss related to compressor station fire | $ | 6 | $ | — | ||||||
| Atlantic-Gulf | — | — | ||||||||
| West | — | — | ||||||||
| NGL & Petchem Services - Geismar Incident adjustment for insurance and timing | (116 | ) | — | |||||||
| Total adjustments | (110 | ) | $ | — | ||||||
| Adjusted segment profit: | ||||||||||
| Northeast G&P | $ | 195 | $ | 355 | ||||||
| Atlantic-Gulf | 630 | 965 | ||||||||
| West | 620 | 595 | ||||||||
| NGL & Petchem Services | 900 | 915 | ||||||||
| Total adjusted segment profit | $ | 2,345 | $ | 2,830 | ||||||
| Depreciation and amortization (DD&A): | ||||||||||
| Northeast G&P | $ | 170 | $ | 210 | ||||||
| Atlantic-Gulf | 430 | 495 | ||||||||
| West | 235 | 235 | ||||||||
| NGL & Petchem Services | 85 | 95 | ||||||||
| Total depreciation and amortization | $ | 920 | $ | 1,035 | ||||||
| Adjusted segment profit + DD&A: | ||||||||||
| Northeast G&P | $ | 365 | $ | 565 | ||||||
| Atlantic-Gulf | 1,060 | 1,460 | ||||||||
| West | 855 | 830 | ||||||||
| NGL & Petchem Services | 985 | 1,010 | ||||||||
| Total adjusted segment profit + DD&A | $ | 3,265 | $ | 3,865 | ||||||
